Journal of Business and Public Affairs

29

External Debt of Ethiopia: An Empirical

Analysis of Debt and Growth

Dr. G. Ramakrishna

Associate Professor, Department of

Economics, Osmania University

Hyderabad-7, India

In this paper, an attempt is made to study the external debt situation in Ethiopia

across its three economic regimes. We estimated a debt-growth model in a

cointegration framework. The evidence provided by the model supports the debt

overhang hypothesis as the country has been on the wrong side of the debt Laffer

curve. The model indicates negative as well as non-linear relation between debt and

growth. In view of these results we recommend more and more debt relief to Ethiopia

along with fiscal consolidation and efficient investment utilization.

E

xternal debt magnitudes of larger

proportion have been very

common in Sub-Saharan Africa.

Many countries in this region have been

struggling with debt burdens that

outweigh their export earnings, the

growth rate and even level of their gross

national products. The World Bank

(World Debt Tables, 1987-88, p.xix)

reveals that “the external indebtedness of

African countries is an obstacle to the

‘restoration’ of the conditions needed for

growth.” The huge debt burden acts as a

threat to the economic performance

given the wide spread poverty and

structural rigidities in these countries.

The international financial community

has been providing help to Sub-Saharan

Africa regarding external debt burden

reduction, among other things. This

assistance has been provided in the form

of the provision of concessional financ-

ing from international financial institu-

tions, debt relief from official creditors

mainly in the context of Paris Club

rescheduling, and, in some cases,

through bilateral action by the creditors.

Though, these measures have resulted in

considerable success in alleviating the

external debt burdens of many middle-

income countries, the countries in sub-

Saharan Africa continue to suffer from

unacceptable levels of poverty and heavy

external debt burdens (IMF, 2001).

Foreign debt burden is a symptom of

serious problems in the economy. An

acute foreign debt implies, inter alia,

that the country is unable to finance its

impost, unable to garner its own savings,

has exchange rate problems, and/or its

productivity is low. As a result, some

nations have attempted to turn the tide

by restructuring their economies through

structural adjustment programs. Unfortu-

nately, the structural adjustment pro-

grams they followed have mostly

faltered and countries are even more

exposed to huge foreign debts than ever

before.

Theoretical models on debt and

growth have indicated a positive link

between a reasonable amount of debt

inflows and economic growth. The

implication of these models is that

capital scarce countries benefit in the

wake of capital inflows. However, the

literature also links larger inflows of debt

leading with lower economic growth.

The famous debt overhang hypothesis is

a case in point. It is shown that the

expected debt service (which is interest

and principle on the debt) is an increas-

ing function of a country’s output level.

The returns from investing in country,

therefore, face a high marginal tax by the

external creditors, and new domestic and

discouraged foreign investment.

(Krugman, 1988, Sachs, 1989), Salih

(1994) inquire into the growth-debt

linkage in Africa and present evidence

that is consistent with the debt overhang

literature. The studies provide evidence

of a negative relationship between per

capita debt and per capita growth of

30

Journal of Business and Public Affairs

African countries, including Ethiopia.

Barring few studies in recent times

1

,

most of the earlier works on growth-

debt linkage have used models, which

were not well explored in the sense they

either used single equation models or

ignored the possibilities of non-linear

effects of debt on growth. In addition,

the earlier models have ignored the

impact of structural adjustment pro-

grams, which is an important augment-

ing factor of debt flows, particularly in

Africa. More importantly, these studies

have not tested the presence of unit roots

in the macro variables. Since most of the

macro time series variables present non-

stationarity, the existence of debt Laffer

curve, and the debt-growth relationship

need to be studied after testing the

presence of unit roots in order to avoid

spurious correlations. The present study

tries to fill some of these gaps by

estimating the debt-growth relation in

Ethiopia in a cointegration framework.

The study is pursued with twin objec-

tives: 1) to delineate the external debt

scenario of Ethiopia over its three

economic regimes with special reference

to its economic reform period; and 2) to

examine the debt-growth linkage and

discern whether Ethiopia is on the wrong

side of the debt Laffer curve.

The remainder of the paper is

structured as follows: Section two is

devoted to a brief review of theoretical

issues and empirical evidences relating

external debt. Section three provides the

factual information relating Ethiopian

debt scenario. In section four, we present

an empirical analysis relating the link

between foreign debt and economic

growth; and also verify the existence of

debt Laffer curve. The final section

comes out with the conclusion and some

policy implications.

Theoretical Issues and

Empirical Evidences

As the development efforts in most

of the poor countries involve invest-

ments that are greater than their domestic

savings, foreign finance in the form of

external debt becomes absolutely

necessary. Chenery and Strout (1966)

feel that this finance in the form of aid

contributes to growth by relieving some

of the potential bottlenecks of savings

and foreign exchange. However, many

debt-ridden African nations witnessed

slow growth in the late 1970s and early

1980s. This slow growth resulted in wide

spread poverty and inability to honor the

foreign liabilities incurred.

The debt Laffer curve is associated

with Krugman (1989), Froot (1989) and

Cohen (1993). Krugman’s argument has

been that high debt results in efficiency

losses. This idea has been discussed first

by Sachs and Huizinga (1987). The

existence of debt Laffer curve has been

used in the argument that ‘it is in the

creditors’ collective interest to forgive

some of the external debt of a heavily

indebted country. Hussain (1997) shows

that a country is on the wrong side of the

debt Laffer curve only when it is on the

wrong side of its domestic tax Laffer

curve. Nikbabakht (1984) concludes that

external borrowing does not necessarily

have a strong association with the values

of economic indicators in developing

countries. It is the spending pattern of

loans rather than the amount of loans,

which had a major impact on growth.

The positive effects of debt reduction on

investment are provided by Borensztein

(1990), Morisset (1991); Greene and

Villanueva (1991); and Savvides,

Andreas (1992). Humphrey and

Underwood (1989) feel that the African

debt problem is severe compared to other

developing economies and has older

origins, intellectual as well as economic

dimension.

Corden (1989) and Helpman (1989)

note that debt forgiveness could increase

investment by reducing future debt

payments. Sachs’ (1989) studies

decapitalization and the decline in the

rate of capital accumulation in the highly

indebted countries. Using panel data

econometric methods, Hajivassiliou

(1989) sheds more light on illiquidity

and disincentives. He provides evidence

for illiquidity not being the sole reason

for payment problems. Dornbusch and

Fischer (1985) have concluded that

imprudent borrowing by debtor countries

and lending by commercial banks had

led to unfavorable world macroeconomic

conditions and exposed the vulnerability

of both the debtors and the creditors.

Green (1989) and Ajayi (1991) argue

that both external and internal factors

explain Africa’s debt burden.

Geda (1997) shows that debt to

GDP ratio of Africa has grown from 22

percent in 1972 to 130 percent in 1992.

A study by Oxfam International (1997)

reveals that African debt servicing

absorbs one quarter to one third of

foreign exchange earnings, diverting the

TABLE 1

Annual Growth Rates of Some Macro Variables in Ethiopia, 1970-98

Year

GDP

Debt

LD

DS

IP

Res

1970-1975 2.00 13.18 13.18

3.11 11.4 2

2.75

1976-1991 2.43 13.21 12.17

7.18

6.04 -16.89

1992

11.30 62.80 63.33 -27.52

8.51 60.74

1993

1.57 3.731

3.06 -14.74 -62.07 46.00

1994

5.98

3.58

2.97 15.18 34.09 14.97

1995

10.12

-0.25

2.10 27.27 30.16 27.85

1996

5.41

0.40

-3.07 55.62 -14.55 -11.19

1997

0.45 -0.03 -0.62 -247.00 -17.02 -46.02

1998

-1.38

2.63

1.95 15.97

6.00

3.46

1992-1998 2.91 10.41

9.96 -25.03

-2.13 13.69

Note: GDP= Gross Domestic product, Debt= External debt, LD= Long-term debt,

DS=Debt service, IP= Interest payments and RES = Reserves. GDP is in millions of

Birr and other variables are in US$ millions.

Source: GDP data are from the IMF, International Financial Statistics Year Book, 2000,

and the debt data are from the World Bank, World debt tables and Global Development

Finance, various issues.

Journal of Business and Public Affairs

31

resources from investment. Were (2001)

shows a negative relationship between

external debt accumulation growth and

investment for Kenya. Osei (1995)

suggests that external debt is a major

constraint to the economic performance

of Nigeria and Ghana. Metwally (1994)

concludes that the effect of debt service

ratio on economic growth is negative in

some of the Asian economies. Degefe

(1992), using a growth-debt model for

Ethiopia, concludes that external capital

had a differential impact on growth

during the Derg and Imperial regimes

and it adversely affected economic

growth. The study by Geda and Zerfu

(1998) reveals that Ethiopia’s foreign

debt has been increasing in its magnitude

and has become large relative to the size

of its economy and level of exports.

Ethiopian External

Debt Scenario

Ethiopia, one of the poorest coun-

tries in the world, has witnessed broadly,

three policy regimes: the imperial rule

(prior to 1975), the socialist regime

(1975-1991), and the present regime

(1992 on wards). The first regime

adopted non-interventionist approach,

the second followed rigid inward looking

strategy and the third initiated economic

reforms to address the long-term

structural problems of under develop-

ment. Beginning in 1992, the Ethiopian

government began to implement an

economic reform program with a view to

revive the economy. Various policy

measures, some homebred, others

imposed by the IMF and the World

Bank, have been undertaken. Table-1

presents average annual growth rates of

some of the macro economic variables

representing these regimes.

Ethiopia’s debt grew at an average

rate of 13.18 percent during 1970-75

(first regime). The debt service grew at

3.11 percent during this regime. Infra-

structure was given a major share in

utilizing the long- term debt, which

constituted 100 percent of the total debt

4

.

During the second regime (1976-91),

imprudent economic policies led to

inefficiencies in investments. As a

consequence external debt increased by

13.21 percent and the debt service by

7.18 percent. Debt indicators have

shown phenomenal increase during this

period (Table 2), while debt servicing as

a ratio of exports declined by 1991.

The post 1991 period in Ethiopia

has witnessed several economic reforms

under the structural adjustment program.

This became compulsory due to the

serious balance of payment crisis in

Ethiopia. The new government, which

took over in 1991, initiated a set of

reforms to address both the need for

immediate macroeconomic recovery and

long-term structural problems of

underdevelopment. The reforms

included market oriented policies

targeted at removing price and cost

distortions, encouraging private sector,

promoting exports, and progressive

liberalization of the economy with a

corresponding reduction in the role and

size of the government sector. The

objectives of the reforms included broad

based and equitable economic growth,

lower inflation, and a rapid increase in

agricultural output through productivity

gains. The reform policies had the

encouragement and financial support of

both the World Bank and the Interna-

tional Monetary Fund.

During 1992 to 1998, the foreign

debt of Ethiopia grew by 10.41 percent

while the debt service dropped by 25.03

percent. Out of the total debt during this

period, the long-term loan was 95.2

percent, the short-term debt was 4.23

percent and the IMF credit was 0.56

percent

5

. When we look into the debt

ratios, they have presented divergent

trends (see Table 2). The debt/GDP ratio

has fallen from 169.22 percent in 1992 to

160.34 percent in 1998. Debt service as a

ratio of exports has declined from 23.74

percent to 11.23 percent during this

period. The World Bank classifies

countries on three levels: severely

TABLE 2

Indicators of Debt in Ethiopia: 1970-1998

Year Debt/GDP

Debt/Exp

DS/Exp

IP/Exp

IP/GDP

LD/Debt

Res/Debt

1970

9.52

91.35

11.35

3.24

0.338

100.00

42.60

1975

12.91

98.57

7.163

3.152

0.41

100.00

91.57

1980

19.96

135.75

7.414

2.80

0.41

85.07

31.79

1985

38.96

337.9 7

26.94

8.50

0.98

92.35

11.56

1990

54 .99

481.98

34.86

8.71

0.99

95.71

1.69

1991

53.40

635.28

25.41

7.86

10.66

94.99

3.05

1992

169.22

2035.08

23.74

10.24

0 .85

96.38

2.89

1993

157. 70

1887.74

18.48

5. 64

0.47

95.71

5.15

1994

208.56

1787.39

19.89

7.82

0.91

95.11

5.84

1995

175.52

1242.33

19.06

7 .80

1.10

97.39

8.12

1996

168.90

1221.58

42.06

6 .67

0.92

94.12

7.27

1997

158.96

96 8.75

9.62

4.52

0.74

93.57

4.98

1998

160.34

976.13

11.23

4.72

0.77

92.92

5.03

Note: Exp= Exports; all the data are in US $ millions.

Source: World Bank, World Debt Tables and Global Development Finance, various issues

32

Journal of Business and Public Affairs

indebted; moderately indebted; and less

indebted. Countries are severely indebt if

they have a debt/GDP ratio of 50 percent

or more; a debt/export ratio of 275

percent or more; and a debt service/

export ratio of 30 percent or more. Even

though the debt service/export ratio is

low and has declined in the latter years

for Ethiopia, the country faces severe

debt/GDP and debt/export ratios.

External Debt and Economic

Growth in Ethiopia

No empirical study exists exploring

the validity of debt overhang hypothesis

using debt Laffer curve on Ethiopia. This

is what we intend to do in this paper. To

do this, we have culled data on GDP,

agricultural output, exports and imports,

all in real terms, using National Bank of

Ethiopia

6

as our source. The data on

Debt and the related variables such as

debt servicing, interest payments are

collected from Ministry of Finance,

Ethiopia. We have collected data on

fiscal balance from International

Financial Statistics, Yearbook, 2000. All

the data are in millions of Ethiopian Birr.

In general, the validity of debt Laffer

curve is estimated using the following

model, which can be applied to the

period of 1970-71 and 1997-98 in the

case of Ethiopia. As shown below,

Model 1 is estimated without the

intercept as the debt Laffer curve is

assumed to start from the origin.

MODEL 1

ß

1

DEBT +

ß

2

[DEBT]

2

+ error

The results obtained by the model

could be spurious if the variables present

unit roots. We have used Augmented

Dicky Fuller test to test the presence of

unit roots. The test procedure indicates

that the variables are non-stationary at

the levels while they are stationary at the

first difference level. The test procedure

used is the standard Dickey-Fuller

(ADF) Unit Root test. The ADF results

are presented in Table 3.

Since all the variables are found to

be stationary in their first differences, we

have estimated our regression model

using cointegration method suggested by

TABLE 3

Unit Root Test

Variable

ADF Statistic

Variable

ADF Statistic

DEBT

-1.352802

GY

-3.946988**

.

DEBT

-4.228915**

.

GY

-5.056800*

[DEBT]

2

-0.608335

FB

-3.953989**

.

[DEBT]

2

-5.476999*

.

FB

-4.962863*

GAG

-4.160240**

OPEN

1.276830

.

GAG

-5.26540*

.

OPEN

4.050383**

DEBT/GDP

-4.160240**

SSGDP

-2.797574

.

DEBT/GDP

-5.260540*

.

SSGDP

-3.365684***

RCFGDP

-2.282665

DS

-2.997081

.

RCFGDP

-3.286862***

.

DS

-4-679887*

Note: *, **, *** indicate significance levels at the 1%, 5%, and 10%, respectively.

TABLE 4

Debt Laffer Curve- Results of Cointegration Model

DS

Debt

[Debt]

2

Constant

1.000000

-0.121317

3.20E-06

88.92044

(0.00763)

(2.7E-07)

Log likelihood

-871.7628

Note: Figures in the brackets are standard errors

Johansen (1995). The method is useful in

determining whether the non-stationary

time series are cointegrated. The test

procedure provides options for specify-

ing the type of deterministic trend

present in the data. We have assumed

linear deterministic trend in the data. The

results of the cointegration model have

been presented in the following table.

The results support the hypothesis of

debt overhang in Ethiopia as the coeffi-

cient of [Debt]

2

is negative and statisti-

cally significant. The country has been

on the wrong side of the debt Laffer

curve. To verify the debt-growth

relation, we have estimated a multivari-

ate regression model involving non-

linear debt as a variable. To avoid

spurious correlations we conducted a

cointegration test after verifying time

series properties of the variables. Model

2 includes several other growth deter-

mining fundamentals along with debt.

We had to confine only to selected

Where, GY = growth of per capita income, GAG = growth of agriculture, [DEBT/

GDP]

2

= Ratio of DEBT to GDP squared, FB= Fiscal balance, RCFGDP= Ratio of

capital formation to GDP

OPEN= Trade volume as a ratio of GDP, SSGDP= Expenditure on social sector as a

ratio of GDP [proxy for expenditure on Education and Health].

MODEL 2

Journal of Business and Public Affairs

33

variables due to multicollinearity and

data availability problems. The limited

data points have also put a restriction on

using different lag lengths. The objective

was to verify the sign of the coefficient

of non-linear debt variable. The results

of our model may be presented as

follows:

.

The coefficient of agricultural

growth is positive implying the

importance of Ethiopian agriculture

in influencing its economic growth;

.

The impact of debt squared is

negative thereby supporting the

debt-growth Laffer in Ethiopia. The

larger the debt flows, the lower rate

of growth of GDP;

.

Fiscal balance has a negative impact

on rate of growth, supporting the

need for fiscal consolidation in

Ethiopia;

.

The impact of investment on

economic growth is negative. This

may be due to the inefficiency of

investments during the study period

for this country;

.

The relation between openness and

growth is found to be negative. This

may be due to the trade distortions

that dominated during the study

period; and,

.

The effect of social sector expendi-

ture, though positive, was statisti-

cally not significant.

Conclusion

This study presented the external

debt scenario of Ethiopia over its three

economic regimes with a special

reference to its economic reform period.

The study also confirmed the debt-

growth linkage in Ethiopia. The trends in

foreign debt across various regimes

indicate that Ethiopia has been a severely

indebted country and continues to be so

even after the economic reforms in the

1990s. It has been experiencing a steady

increase in its debt/GDP ratio, which

became more than its GDP since 1992.

The Debt /exports ratio rose to more than

100 percent in the 1980s and remained at

a very high level in the 1990s. This has

pushed the country into severe debt

service difficulties. Despite rescheduling

and other policy measures, the country

has not been able to meet its debt service

TABLE 5

Cointegration model on Debt and Growth (1970-1998)

Five Percent

One Percent

Hypothesized

Eigen Value

Likelihood Ratio

Critical Value

Critical Value

No. of CE(s)

0.994803

334.5187

146.76

158.49

None **

0.959621

208.2849

114.90

124.75

At most 1**

0.871289

131.2580

87.31

96.58

At most 2**

0.79940

82.05363

62.99

70.05

At most 3**

0.658680

43.49900

42.44

48.45

At most 4*

0.428586

17.70054

25.32

30.45

At most 5

0.162957

4.269129

12.25

16.26

At most 6

*(**) Indicates rejection of hypothesid at 5(1) percent significance level. LR test indicates five cointegrating equations at five percent

significance level. Test assumption: Linear deterministic trend in the data.

Normalized Cointegrating Equation

GY

GAG [DEBT/GDP]

2

FB RCFGDP

OPEN SSGDP TREND

C

1.000000

-0.296919

0.263481 0.000174 0.109515 0.051697 -0.84736 0.007474 -0.0495

(0.00754)

(0.00954) (3.6E-06) (0.02411) (0.00605) (0.16671) (0.00028)

Log likelihood 159.3473

Note: Figures in the parentheses are standard errors

obligations. Debt arrears have increased

thereby increasing Ethiopia’s debt

burden.

The evidence supports debt over-

hang hypothesis for Ethiopia as the

country is on the wrong side of the debt

Laffer curve. The model used by the

study indicates negative and non-linear

relation between debt and growth. The

evidence also shows that fiscal balance,

investments, and openness have

influenced economic growth negatively

(the exception being agriculture). These

results support the cases for more debt

relief and fiscal consolidation and

efficient investment utilizations for

Ethiopia. However, the evidence

provided by the model needs to be

strengthened by including other growth

determining fundamentals such as

political instability, policy framework,

governance and on the external front,

terms of trade, etc. This demands

comparable and consistent long period

data sets, which are a major problem in

Ethiopia.

34

Journal of Business and Public Affairs

End Notes

1

See Pattillo, C, Helen Poirson and

Luca Ricci (2002)

2

UNDP (2002), Human Development

Report P.151.

3

The chronology of Ethiopian

famines and food shortages is well

documented by Webb and J.V Braun

(1994). They enlisted 40 periods of

such crises.

4

The data are collected from Ministry

of Finance, Ethiopia.

5

Ibid.

6

The data are collected from National

Bank of Ethiopia (1999).

References

Ajayi, Ibi (1991). Macro Economic

approach to External Debt- the case of

Nigeria, AERC Research Paper, 8,

December.

Borensztein. E. (1990). Debt Overhang,

Debt Reduction and Investment: The

Case of the Philippines. IMF Working

Paper, 90/77, IMF, September.

Cohen. D. (1993). “Low Investment and

large LDC Debt in the 1980s,” American

Economic Review, 83, 437-49.

Corden. W.H. (1989). “Debt Relief and

Adjustment initiatives” in J.A. Frenkel,

M.P.Dooley and P. Wickam (Eds.),

Analytical Issues in Debt, IMF, Wash-

ington. D.C.

Chenery. H.B. and A.M. Strout (1966).

“Foreign Assistance and Economic

Development,” American Economic

Review, LVI, 4, September 679-733.

Degefe, B. (1992). Growth and Foreign

Debt: The Ethiopian Experience, AERC

Research Paper, 13.

Dornbusch, R. and S. Fischer (1985).

“The World Debt Problem: Origin and

Prospects,” Journal of Development

Planning.

Froot, K. (1989). “Buybacks, Exit

Bonds, and the Optimality of Debt and

Liquidity Relief,” International Eco-

nomic Review, 30, 49-70.

Geda, Alemayehu (1997). The Historical

Origin of African Debt and Financial

Crisis, ISS Working Paper, 62, The

Hague.

__________ and Daniel Zerfu (1998).

“Profile of Ethiopian External Debt,”

paper presented in the Eighth Annual

conference of EEA, October.

Green. J.E. (1989). “External Debt

Problem of Sub-Saharan Africa” in

Jacob A. Frenkel et al. (Eds.).

Green. J and Delano Villenueva (1991).

“Private Investment in Developing

Countries,” IMF staff Papers, 38, 33-58.

Humphreys and J. Underwood (1989).

“The External Debt Difficulties of Low-

Income Africa” in Husain. I and Diwan

(Eds.), Dealing with the Debt crisis,

World Bank Symposium, The World

Bank, Washington, D.C.

Helpman, E. (1989a). “The Simple

Analytics of Debt-Equity Swaps,”

American Economic Review, 79,440-51.

——————(1989b). “Voluntary Debt

Reduction: Incentives and Welfare,” in

J.A. Frenkel, M.P. Dooley and

P.Wickam (eds.), Analytical Issues in

Debt, IMF, Washington, DC.

Hajivessiliou. V.A. (1989). “Do the

Secondary Markets Believe in Life after

Debt.” in Husain. I and Diwan (Eds.),

Dealing with the Debt crisis, World

Bank Symposium, The World Bank,

Washington, D.C.

Husain. A.M. (1997). “Domestic taxes

and the External Debt Laffer Curve,”

Economica, 64, 519-25.

IMF (2001a). Debt relief under the

Highly Indebted Poor Countries Initia-

tive, a fact Sheet, April, Washington,

D.C.

IMF (2001b). 100 percent Debt Cancel-

lation. A response from the IMF and the

World Bank, a fact sheet, July, Washing-

ton, D.C.

Johansen. S. (1995). Likelihood-based

Inference in Cointegrated Vector

Autoregressive Models, Oxford Univer-

sity Press.

Krugman, Paul (1988). “Market-Based

debt Reduction Schemes,” NBER

working Paper, 2587, Cambridge.

——————— (1989). “Market-

based Debt Reduction Schemes,” in J.A.

Frenkel, M.P.Dooley and P.Wickam

(eds.), Analytical Issues in Debt. IMF,

Washington, DC.

Metwally, M.M. (1994). “The Debt-

Servicing Problem of Some Asian

Countries,” The Indian Economic

Journal, 41, Jan-March, 98-110.

Morisset, J. (1991). Can Debt-reduction

Policies Restore Investment and

Economic Growth in Highly Indebted

Countries: A Macro Economic

Framework Applied to Argentina. PRE

Working Paper, 691, World Bank.

National Bank of Ethiopia (1999). Time

Series Data on Macro Economic

Variables, Compiled by Economic

Research Department, March.

Nikbhakt, E. (1984). Foreign Loans and

Economic Performance: The Experi-

ences of the Less Developed Countries,

Praeger Publishers.

Ohlin, G. (1966). Aid and Indebtedness.

Development Centre of OECD.

Osei, B. (1995). Ghana: The Burden of

Debt Service payment under Structural

Adjustment, AERC research Paper, 33,

Nairobi.

Journal of Business and Public Affairs

35

Oxfam (1997). “Poor Countries Debt

Relief: false dawn or New Hope for

Poverty Reduction.” Oxfam Policy

papers.

Pattillo, C, Helen Poirson and Luca Ricci

(2002). External Debt and Economic

Growth, Working Paper, 69, IMF, April.

Sachs, J (1985). Theoretical issues in

International borrowing. Princeton

studies in International Finance, 54,

Princeton, N.J.

_________ (1989). “The Debt Overhang

of Developing Countries,” in Ronald

Findlay (Ed), Debt, Stabilization and

development, Essays in memory of

Carlos F. Diaz- Alezandro, Oxford,

Blackwell.

Sachs. J. and H. Huizinga (1987). “US

Commercial Banks and the developing

Country Debt Analysis,” Brookings

papers on Economic activity, 2, and 555-

606, November.

Salih. S.A. (1994). Impacts of Africa’s

Growing Debt on its Growth, UNU/

WIDER.

Savides. A. (1992). “Investment Slow-

down in Developing Countries During

the 1980s. Debt Overhang or Foreign

Capital inflows.” Kyklos, 45, 363-378.

UNDP (2002). Human Development

Report.

Webb, P. and Joachim Von Braun

(1994). Famine and food security in

Ethiopia: lessons for Africa. England

John Wiley & Sons Ltd.

Were, M. (2001). The Impact of External

Debt on Economic Growth in Kenya: An

Empirical Analysis, Discussion Paper,

116, WIDER, October.

World Bank (1987-88), World Debt

Tables.