The sustainability of fiscal policy in southern African countries–a comparative empirical perspective

Abstract

Purpose: The purpose of the paper is to assess the fiscal sustainability of nine southern African countries that belong to the Southern African Development Community. Design/methodology/approach: In this paper, the author performs a novel time-varying analysis of fiscal sustainability in southern African countries. Findings: The authors found that in Zimbabwe and Namibia, the formal condition of solvency was not fulfilled, resulting in the explosive growth of debt during the recent slowdown. In contrast, Angola, Botswana and Malawi prove to run sustainable fiscal policies, and they were also fiscally invulnerable to the recent unfavourable economic developments in Africa. For the rest of the countries in the sample (Eswatini, Lesotho, South Africa and Zambia), the results are mixed. Originality/value: In the existing literature, there is abundance of empirical evidence concerning fiscal sustainability in European and American countries. In contrast, there is strikingly little knowledge concerning this phenomenon in African countries. The authors tried to fill this gap using a novel, time-varying approach.