Debt sustainability in countries participating in the Belt Road Initiative: Which countries face the risk of sovereign default?
(2019) EKHS51 20191Department of Economic History
- Abstract
- The event of the Hambantota port, Sri Lanka’s major port, raised concerns about the Belt Road Initiative. The Sri Lankan government had to hand over the country’s most important port to the Chinese government due to the inability to pay back its loans owed to China. Similar cases have been noticed in other participating countries of the Belt Road Initiative. However, the Chinese government does not report the planned projects, nor they report the amount and conditions of loans they lend to participating countries. Therefore, it is of high importance for participating countries to be aware of their solvency in order to prevent the risk of a sovereign default. The thesis aims to analyze which countries face a debt sustainability problem. The... (More)
- The event of the Hambantota port, Sri Lanka’s major port, raised concerns about the Belt Road Initiative. The Sri Lankan government had to hand over the country’s most important port to the Chinese government due to the inability to pay back its loans owed to China. Similar cases have been noticed in other participating countries of the Belt Road Initiative. However, the Chinese government does not report the planned projects, nor they report the amount and conditions of loans they lend to participating countries. Therefore, it is of high importance for participating countries to be aware of their solvency in order to prevent the risk of a sovereign default. The thesis aims to analyze which countries face a debt sustainability problem. The method used for identifying those countries is a debt dynamics calculation. The data used for the calculation were primarily retrieved from the International Monetary Fund and the World Bank. The method examines the gap between the actual primary balance and the stabilizing primary balance required. The results indicate 10 countries participating in the Belt Road Initiative with a high fiscal gap. Furthermore, 9 out of these 10 countries are either Emerging Market Economies or Low-income Countries and are primarily located in Africa, the Middle-East, Central and South Asia. The results indicate that further research is needed in order to raise awareness about debt sustainability issues in countries participating in the Belt Road Initiative. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8993838
- author
- Veske, Norman LU
- supervisor
- organization
- course
- EKHS51 20191
- year
- 2019
- type
- H1 - Master's Degree (One Year)
- subject
- language
- English
- id
- 8993838
- date added to LUP
- 2019-09-12 12:53:16
- date last changed
- 2019-09-12 12:53:16
@misc{8993838,
abstract = {{The event of the Hambantota port, Sri Lanka’s major port, raised concerns about the Belt Road Initiative. The Sri Lankan government had to hand over the country’s most important port to the Chinese government due to the inability to pay back its loans owed to China. Similar cases have been noticed in other participating countries of the Belt Road Initiative. However, the Chinese government does not report the planned projects, nor they report the amount and conditions of loans they lend to participating countries. Therefore, it is of high importance for participating countries to be aware of their solvency in order to prevent the risk of a sovereign default. The thesis aims to analyze which countries face a debt sustainability problem. The method used for identifying those countries is a debt dynamics calculation. The data used for the calculation were primarily retrieved from the International Monetary Fund and the World Bank. The method examines the gap between the actual primary balance and the stabilizing primary balance required. The results indicate 10 countries participating in the Belt Road Initiative with a high fiscal gap. Furthermore, 9 out of these 10 countries are either Emerging Market Economies or Low-income Countries and are primarily located in Africa, the Middle-East, Central and South Asia. The results indicate that further research is needed in order to raise awareness about debt sustainability issues in countries participating in the Belt Road Initiative.}},
author = {{Veske, Norman}},
language = {{eng}},
note = {{Student Paper}},
title = {{Debt sustainability in countries participating in the Belt Road Initiative: Which countries face the risk of sovereign default?}},
year = {{2019}},
}