Assessing the long-term economic stability of public debt in Tanzania

Purpose This study empirically analyzes the impact of public debt on long-run economic growth and stability in Tanzania. Design/methodology/approach Autoregressive Distributed Lag (ARDL) Model estimation with a bound cointegration test establishes the short- and long-term relationship. Findings The results show that public debt decreases economic growth and stability in the long run, underscoring the importance of sound debt management practices. These include ensuring a mix of external and domestic borrowings, more robust institutional frameworks and greater economic diversification, which are vital for the country’s long-term economic stability. Originality/value The research findings help policymakers formulate sensible fiscal policies and debt management strategies for a stable macroeconomic environment. The study addresses a significant gap in the existing literature due to focusing on a significant Tanzanian context and thus contributing to regional stability, as well as the global Sustainable Development Goal (SDG 2) that strives towards “zero hunger.”