Public Debt and External Debt Sustainability among BRICS Countries

Abstract

This study analyses an important policy issue pertaining to the public debt and external debt of BRICS nations from 1993 to 2020 using the Bohn framework and a penalised-spline estimation method. It also checks the robustness of the results using the ADF and co-integration tests. The results indicate that as the primary surplus reacts positively and significantly to public debt in China and South Africa, the debt is sustainable in these nations. In Brazil, India and Russia, the debt is not sustainable. The external debt policy is sustainable only in China and not in other BRICS nations. These results suggest the need for immediate policy interventions in Brazil, India and Russia to achieve sustainable levels of public debt and external debt. We hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to improve the public debt and external debt position of BRICS nations and to make them sustainable. JEL Codes: H63, C23, D72, E62, H72