Analysis of the Impact of Public Debt on Economic Growth and Poverty in Tanzania

Abstract

Recently literature revealed that the Tanzania public debt and economic growth are growing simultaneously however the economic growth achievements do not reflect the poverty reduction initiatives in Tanzania. Despite rapid growth of the public debt and poverty for Tanzania no studies have been undertaken to investigate the impact of the public debt on economic growth and poverty in Tanzania. The present study is aiming to evaluate the impact of the public debt on economic growth and poverty during the period from 2000 to 2018 in Tanzania. With this regard the study employed the Multiple linear regression model to evaluate the impact of the public debt on economic growth and poverty during the period from 2000 to 2018 in Tanzania. Time series data from the Bank of Tanzania Annual Reports and the World Bank data indicators during the period from 2000 to 2018 for Tanzania have been used by the study. On investigating the impact of public debt on economic growth and poverty the study assumes public debt to be an independent variable while Gross domestic product (GDP) and poverty to be dependent variables of the study. The findings of the study were indeed very impressive. The study findings showed that there is a negative and insignificant correlation between the public debt and all the study’s dependent macroeconomic variables (Gross domestic product and poverty) during the period from 2000 to 2018 in Tanzania. The meaning is the public debt does not have an impact on the economic growth and poverty reduction during the period from 2000 to 2018 in Tanzania.