Effect of Interest Payments on External Debt on Economic Growth in Kenya
In Kenya, interest payments on external debt have been increasing from 2010 to 2015, while GDP growth experienced a slight decline over the same period. Policymakers are concerned that the rapid increase in external debt in developing countries such as Kenya has the potential to erode the country's sovereign rating, particularly if it is not supported by proportionate growth in the size of the economy. The purpose of this study was to investigate the effect of interest payments on external debt on economic growth in Kenya. The study utilized secondary data for 25 years, from 1991 to 2015, for GDP growth and interest payments on external debt. The results from the analysis of variance statistics indicate that the model was statistically significant. This implies that interest payments on external debt are good predictors of GDP growth. Regression coefficient results show that GDP growth and the logarithm of interest payments on external debt are negatively and significantly related. The study recommends that future government plans should ensure that external borrowings are taken at rates not higher than the interest rate payments.
Code (0)
등록된 구현이 없습니다.
Similar Papers 제목 키워드 기반
Weighing Anchor on Credit Card Debt
We find it is common for consumers who are not in financial distress to make credit card payments at or close to the minimum. This pattern is difficult to reconcile with economic factors but can be explained by minimum p…
Buy Now, Pay Later (BNPL)...On Your Credit Card
We provide the first economic research on `buy now, pay later' (BNPL): an unregulated FinTech credit product enabling consumers to defer payments into interest-free instalments. We study BNPL using UK credit card transac…
Tracking the Hidden Forces Behind Laos' 2022 Exchange Rate Crisis and Balance of Payments Instability
This working paper uses a Dynamic Factor Model ('the model') to identify underlying factors contributing to the debt-induced economic crisis in the People's Democratic Republic of Laos ('Laos'). The analysis aims to use …
Minimizing the Repayment Cost of Federal Student Loans
Federal student loans are fixed-rate debt contracts with three main special features: (i) borrowers can use income-driven schemes to make payments proportional to their income above subsistence, (ii) after several years …
Interdependence of Growth, Structure, Size and Resource Consumption During an Economic Growth Cycle
All economies require physical resource consumption to grow and maintain their structure. The modern economy is additionally characterized by private debt. The Human and Resources with MONEY (HARMONEY) economic growth mo…