The Relationship Between Public Debt and Economic Growth in Kenya
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Date
2013-10Author
Ochiel, Onesmus O
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Public debt is one of the main macroeconomic indicators, which forms countries’ image
in international markets. It is one of the inward foreign direct investment flow
determinants. A prudent public debt management helps economic growth and stability
through mobilizing resources with low borrowing cost and limiting financial risk
exposure. The objective of this study was to establish the relationship between public
debt and economic growth in Kenya.
The study used secondary data collected from various sources collected from the Kenya
National Bureau of Statistics and the Central Bank of Kenya. The study period included
2002/2003-2011/2012 financial periods. The data was collected using data collection
sheet which was edited, coded and cleaned. Data was obtained covering the period
1992/1993-2011/2012 financial periods. To establish the relationship between public debt
and economic development, the study conducted a regression analysis.
Domestic debt is characterized by higher interest rates compared with those on external
debt, which is contracted mainly on concessional terms, and it is therefore expensive to
maintain. Domestic debt reduction could be achieved using proceeds from the
privatization programme of public corporations, or the use of externally borrowed
resources which are mainly on concessional terms to retire more expensive domestic
debt. The government should therefore develop a framework for recording and
monitoring all contingent liabilities and also formulate and implement a policy for
management of the contingent liabilities. The government should therefore continue to
implement wider reforms that promote investment in Treasury bonds, and encourage
institutional investors such as pension funds and insurance companies to invest in
Treasury bonds.
Citation
Degree Of Master of Business Administration (MBA)Publisher
University of Nairobi School of Business
Description
A research project submitted in partial fulfilment
of the requirement for the award of master in
business administration, school of business
University of Nairobi