The Social Sustainability of Public Debt in the Framework of Middle East and North African Countries: Egypt, Lebanon, Morocco, Tunisia, and Turkey

Abstract

The paper’s main objective is to analyze the social sustainability of the external public debt of some MENA countries, namely, Egypt, Lebanon, Morocco, Tunisia, and Turkey between 1990 and 2018. The study carries out a dual statistical and econometric analysis to determine the impact of external public debt on the population welfare. The first analysis aims to examine the evolution of the debt social sustainability indicators and the second uses the Auto Regressive Distributed Lag (ARDL) panel data estimation technique. Statistical analysis reveals that the external public debt service weighs heavily on public spending in health, education, and public investment. While the econometric study establishes that the ratio of external public debt as a percentage of Gross Domestic Product (GDP) has a negative effect on the population’s standards of living. The study concludes that external public debt in MENA countries has been used to finance non-productive expenditures, which have no effect on the population’s living conditions. It highlights the need to consider the views of both debtors and creditors to achieve a comprehensive and sustainable approach to public debt. The latter should integrate the social and environmental consequences of debt on the well-being and living conditions of the population.