Foreign Debt's Effects On Economic Growth

This study examines the impact of external debt on economic performance (growth) of Gabon. After determining the importance of external debt (we will take the period from 1995 to 2005), we present the factors underlying this debt. These factors are endogenous and exogenous.The evaluation of the effects of resources borrowed on the Gabonese economy shows a point of external financing for public consumption and rather low trust in the social sectors and production. This situation does not reassured about the prospects of achieving the MDGs.In addition, the study reveals, through the efficiency of investments financed by resources borrowed, that the State was indebted to achieve economic and social infrastructures whose profitability has not been proven.Therefore, foreign debt has become a burden to the extent that the loans are not repaid by future surpluses. It then creates an accumulation of arrears causing crowding out on public and private savings and therefore investment, engine of growth.The indicators review of debt (external debt service / export earnings and external debt service / revenues), although steadily declining since the negotiations with multilateral agencies, shows that the level of debt external remains high.It is therefore necessary to implement a policy of reducing the debt burden. The action in the framework of this policy should focus on the factors of debt, facilitation of debt service, conversion of debts and the reform of public debt management. This paper is divided into six parts analyzing the impact of foreign debt in Gabonese economy. The first chapter claims the background, the meaning of the research and the meanwhile. The second chapter claims the evolution and structure of external debt. In the third chapter we discuss the factors behind that debt. In the fourth we were considering the scenarios of sustainability of external debt. In fifth chapter claims the outlook for Gabon's external debt in terms of sustainability analysis and solvency. In the sixth chapter we try to give some issues which we think can help Gabon to better contract and apply the foreign debt, it is only by this way Gabonese government may get stable growth. Finally we make a general conclusion of this paper.