Sovereign Asset and Liability Management (SALM) and Efficient Debt Management: An Empirical Study for Jordan

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DOI: https://doi.org/10.28924/2291-8639-22-2024-132
Published: Aug 12, 2024
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Haslindar Ibrahim, Mohammed Aljaloudi, Sovereign Asset and Liability Management (SALM) and Efficient Debt Management: An Empirical Study for Jordan, Int. J. Anal. Appl., 22 (2024), 132.

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Haslindar Ibrahim, Mohammed Aljaloudi

Abstract

This research is about the effect of Sovereign Asset and Liability Management (SALM) on efficient debt management in Jordan using quarterly data from 2005 to 2023. The paper applies time series analysis methods, such as the Autoregressive Distributed Lag (ARDL) and Nonlinear Autoregressive Distributed Lag (NARDL) models to study the links between SALM components (cash reserves, foreign reserves, equity in state-owned enterprises, future revenues, government debt, fiscal expenditures and contingent liabilities) and Jordan's debt-to-GDP ratio. The results show that these variables have a significant impact on the short-term and long-term efficiency of debt management. Besides, the NARDL model shows that there are asymmetric impacts of equity in SOEs, future revenues and fiscal expenditures which means that these variables have different effects when they increase or decrease. The policy recommendations are to keep the debt levels sustainable, to accumulate foreign reserves, to manage contingent liabilities effectively and promote coordination among the relevant institutions for fiscal sustainability and economic growth.

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