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The Evolution of Public Debt Vulnerabilities in Lower Income Economies (English)

Public debt in lower-income economies (LIEs) has risen in recent years, with half of the countries covered in this report now assessed to be at high risk of or already in debt distress. Accommodative global financial conditions and expanded funding from non-Paris club creditors have allowed LIEs to mobilize larger volumes of external financing. Important gaps with respect to debt management and debt data transparency remain. Evaluations by World Bank staff point to some improvement in debt management strategies in recent years, while several LIEs have expanded debt coverage to include guarantees and contingent liabilities and have improved public debt reporting. Countries with significant debt burdens face a difficult trade-off between scaling up public investment to meet ambitious development objectives and containing debt vulnerabilities. Amid diminishing fiscal space and increasing debt vulnerabilities, countries need to create room to implement countercyclical fiscal policy in the face of shocks. This paper focuses on public debt trends in LIEs, which itself is a diverse group. The paper also distinguishes countries by fragility, resource dependence (commodity exporters - fuel and non-fuel - and others), and their heavily indebted poor countries (HIPC) status.

Details

  • Document Date

    2020/01/02

  • Document Type

    Board Report

  • Report Number

    145168

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2020/02/12

  • Disclosure Status

    Disclosed

  • Board Meeting Date

    2020-01-22T00:00:00Z

  • Doc Name

    The Evolution of Public Debt Vulnerabilities in Lower Income Economies

  • Keywords

    access to international capital markets; public debt; local currency bond market; access to bond market; Public and Publicly Guaranteed; sale of government security; short period of time; emerging market bond; access to international market; debt outstanding and disbursed; local currency debt financing; increase in tax revenue; volatility of debt flows; risk of debt; emerging market economy; debt management strategy; foreign currency debt; structure of debt; risk assessment; domestic revenue mobilization; public sector debt; Cash flow forecast; external debt stock; low income economy; foreign direct investment; average interest rate; total public debt; public external debt; public investment management; total external debt; increase in debt; public debt stock; debt service burden; domestic debt market; international oil price; supply of credit; sovereign bond market; central government debt; contingent liability; contingent liabilities; lower oil price; higher interest rate; debt service costs; debtor reporting system; external debt burden; effect of debt; commodity price shock; use of reserves; regional economic integration; natural disaster fund; liquidation of asset; public sector wage; sovereign credit rating; source of financing; development research group; Check and Balances; determinant of capital; reducing public debt; income developing country; variable rate; flow of finance; government bond yield; interest rate source; Public Debt Management; exchange rate risk; government bond market; form of credit; real exchange rate; fiscal consolidation effort; global risk aversion; impact on yield; financial market index; Effective interest rate; changes in risk; investment in railway; management of loan; use of collateral; access to collateral; pension fund asset; capital market borrowing; debt service capacity; high debt levels; real interest rate; stable exchange rate; types of finance; accumulation of arrears; efficiency of investment; global interest rates; increase in risk; fossil fuel export; debt management operation; debt management function; operational risk management; debt management practice; foreign exchange risk; debt sustainability analysis; form of investment; international debt market; debt restructuring agreement; outstanding domestic debt; regional development bank; external public debt; Catastrophe Risk Insurance; least developed country; Foreign Exchange Reserve; development finance institution; evolution of debt; international bond market; bond market access; local currency swap; debt service payment; debt risk rating; improved public; types of debt; small states; Frontier Market; Learning and Innovation Credit; fiscal adjustment; syndicated loan; commodity exporter; debt relief; fuel exporter; monetary policy; fiscal policy; fragile states; Fiscal policies; advanced economy; sovereign debt; interest burden; foreign holding; legal framework; weighted average; project debt; recent years; external borrowing; commercial creditor; debt coverage; first year; financing need; global growth; domestic borrowing; refinancing risk; several countries; fiscal deficit; sustainable financing; interest cost; concessional loan; fiscal space; debt resolution; simple average; loan guarantee; concessional financing; staff capacity; eurobond market; average debt; foreign investor; project financing; global financial; commercial lending; government guarantee; commercial borrowing; debt instrument; capital flow; primary deficit; debt dynamic; investment efficiency; bond debt; lower-income economy; borrower country; Exchange Rates; external financing; global factor; concessional term; debt accumulation; debt liability; Natural Resources; bilateral creditor; term sheets; benchmark index; public capital; fiscal transparency; backed loan; financial deepening; export earnings; baseline projection; financing source; incorporated entity; recent past; export group; recent studies; global demand; internal debt; diagnostic tool

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Citation

The Evolution of Public Debt Vulnerabilities in Lower Income Economies (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/695971579921244762/The-Evolution-of-Public-Debt-Vulnerabilities-in-Lower-Income-Economies