Perspectives of government debt management in the Baltic States

Abstract

Starting to recover after the global financial crisis, the European countries experienced economic growth. However, public debt of the European Union in percentage of GDP has been still increasing. In order to investigate the perspectives of Lithuanian debt extent in the article also two other Baltic States were selected for analysis. It will provide an opportunity to compare management peculiarities of public debt and obtained research results for all the three Baltic States. The paper also provides a brief overview of foreign and Lithuanian scientific researches on the topic of government debt management, paying attention to classification of government debt, debt instruments, influencing factors and impact of debt on country economy and prestige. The aim of the research is after performing a statistical analysis of Baltic countries public debt issues to make a debt forecast and evaluate perspectives. Variables selected for research are GDP, export and import. By making assumption that Russian embargo in 2014 for products of the European countries will impact the economic growth, as well as the government debt, the significance of export and import on the extent of government debt has been estimated. Correlation analysis has revealed that the mentioned factors strongly influence the proportion of government debt. Slightly smaller influence makes the value of GDP.