Determinants of the external debt burden: an analysis for Kenya 1970-1989
This study exam i.ne s the relationship between the real stock of external debt and various hypothesised determinants. The determinants considered are the real value of imports, the real value of exports the real budgetary deficit, the real effective exchange rate and the real foreign interest rates. The aim was to statistically test the nature and significance of the relationship between the stock of external debt and the hypothesised determinants. The empirical model adopted is loglinear and has been estimated using the OLS technique. The findings of the study indicate that the real value of imports, the real value of exports and the real effective exchange rate are important determinants of the real stock of external debt. These factors must therefore be taken into consideration when designing appropriate external debt adjustment policies.