Abstract:

While government debt may play a positive role in enhancing the economic growth of a country but, on the other hand, beyond a certain level it may act in opposite direction, mainly endangering the economic and social status of a country, it should be necessary to find out which are the most representative factors that determine that level. In this regard, this paper analyses the data of 14 developing countries from Central and Eastern Europe, for the period 1998-2017, in order to find out which were the major impact factors on the of government debt. Using econometric methods we concluded that the debt to GDP ratio, use as proxy for government debt, was significantly and positively influenced by the previously level of government debt, but also by unemployment, while real GDP growth, FDI inflows and inflation had significant impacts on reducing the government debt. On the other hand, gross fixed capital formation, trade openness, imports, exports and population size were less significantly impacting on the level of government debt in CEE countries.