Sustainability of external debts: The case of ECOWAS countries

Foreign debt sustainability is pressing issue in developing countries, particularly for Highly Indebted Poor Countries (HIPC). The purpose of this study is to investigate sustainability of foreign debt in Economic Community of West African States (ECOWAS). In the analysis time series data for Benin, Burkina Faso, the Gambia, Ghana, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo (1970-2017) for Cape Verde (1980-2017) and Guinea (1986-2017) is used. To measure sustainability, unit root test and Johansen & Juselius (1990) co-integration test are employed. The unit root tests show that total foreign debt to export ratio is not stationary in all countries verifying unsustainability of foreign debts. Further, co-integration tests results indicate that total foreign debt stock and export are not co-integrated suggesting that foreign debt is not sustainable in all countries. Based on our results some policy recommendations are proposed.