Sovereign Debt A Post HIPC World with New Sources of Credit for - - PowerPoint PPT Presentation

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Sep 22, 2023 179 likes •358 views

The Changing Landscape of Sovereign Debt A Post HIPC World with New Sources of Credit for Development Financing for Development The ability to raise significant domestic revenue results in greater control over policy decisions and the

SLIDE 1

The Changing Landscape of Sovereign Debt

A Post HIPC World

with

New Sources of Credit for Development

SLIDE 2

Financing for Development

The ability to raise significant domestic revenue…

…results in greater control over policy decisions and the development agenda.

SLIDE 3

Sound Public Financial Management

Mobilize domestic tax revenue Improve transparency Fight corruption

Domestic Financing for Development (DF4D)

SLIDE 4

Completion Point

HIPC Nearing Completion – Debt Burden Removed

Pre Decision Point Decision Point Completion Point

Eritrea Somalia Sudan Chad Afghanistan Benin Bolivia Burkina Faso Burundi Cameron Central African Republic Comoros Cote d’Ivoire Dem Republic of Congo Republic of Congo Ethiopia Gambia Ghana Guinea Guinea-Bissau Guyana Haiti Honduras Liberia Madagascar Malawi Mali Mauritania Mozambique Nicaragua Niger Rwanda Sao Tome and Principe Senegal Sierra Leone Tanzania Togo Uganda Zambia Unsustainable Debt Sustainable Debt

Status of Highly Indebted Poor Countries as of March 31, 2013 To date 36 countries have qualified for debt stock reduction of $127 billion.

Source: IMF

SLIDE 5

20 40 60 80 100 120 CP-4 CP-3 CP-2 CP-1 CP CP+1 CP+2 CP+3 CP+4

Percent

The Year in which HIPC countries reached completion point.

Source: IMF staff calculations *Countries that reached HIPC completion point in 2006 or earlier. The post-completion point period includes debt relief from MDRI.

External Public Debt for HIPC Post-Completion Countries Percentage of Debt to GDP

Debt Sustainability Restored

The debt burden of HIPC countries declined rapidly after completion point.

SLIDE 6

Poverty Spending Up – Debt Service Down

SLIDE 7

Official Creditors Expand Beyond the Paris Club…

IFIs (25.5%) Paris Club (74.5%)

1978: US$ 96.6B

Source: IIF

IFIs (33.55%) Paris Club (64.3%) Other Official Bilateral (2.15%)

1994: US$ 600B

Changes in Emerging Market External Debt

SLIDE 8

IFIs (38.3%) Paris Club (41.5%) Other Bilateral (20.2%)

2011: US$ 1,020

Source: IIF , Paris Club

IFIs (36%) Paris Club (41.5%) Other Bilateral (22.5%)

2008: US$ 795B

Changes in Emerging Market External Debt

To a new normal which requires expanding cooperation….

SLIDE 9

Changing Structure of Official Development Assistance (ODA)

Bilateral Grants (59.5%) Bilateral Loans (10.3%) Contributi

ns to IFIs

(30.2%)

Net ODA 1994 US $ 59.2 Billion

Source: World Bank

Bilateral Grants (63.8%) Bilateral Loans (2.2%) Contributions to IFIs (28.8%) Emerging Donors (5.2%)

Net ODA 2009 US$ 126.7 Billion Fewer loans, more grants, & emerging donors…

SLIDE 10

Bi-lateral Creditors 42% Multilateral Creditors 12% Commercial Creditors 46%

1970

Debt Stock = $57 billion Debt Stock = $2 trillion

Source: UNCTAD

Changing Structure of Developing Country Debt

Bi-lateral Creditors 15% Multilateral Creditors 19% Commercial Creditors 66%

2009

Private credit now dominates…

SLIDE 11

The new era of private capital flows

global capital flows to emerging market economies

Net Private Flows (78%) Net Official Flows (22%)

1980 US$ 60.2 B

*of which Paris Club 12%

Source: IIF , World Bank

Net Private Flows (94.6%) Net Official Flows (5.4%)

2011 US$ 1,145B

*of which official Bilateral creditors 3.9%

SLIDE 12

Shift in Principal Official Trade Creditors

G-7 (77.2%) BIC (22.8%)

2002: US$ 46B

*of which China 20% Source: US EX-IM Bank G-7 (54.4%) BIC (45.6%)

2011: US$ 142B

*of which China 35%

SLIDE 13

Today’s Major Sovereign Creditors

40 80 120 160 200 240 280 China Germany France US Brazil India Italy Japan

Cumulative New Medium and Long Term Official Export Credit Volumes: 2006-2011

SLIDE 14

Post-HIPCs also tap international capital markets

Eurobonds: Ghana, Cote

d’Ivoire, Republic of Congo, Senegal, Namibia, Zambia.

Potential Eurobond

issuers: Rwanda, Uganda, Tanzania, Mozambique.

Highlights importance of

fiscal sustainability and the declining importance

f sovereign lending.
Grants still a large part of

investment by African governments.

SLIDE 15

Ghana Malawi Kenya Tanzania Senegal Mozambique South Africa Uganda Sierra Leone DRC Liberia Burkina Faso Zambia Angola Rwanda Republic of Congo Ethiopia Cameroon Mauritania São Tomé and Príncipe Burundi Cote d'Ivoire Madagascar 10 20 30 40 50 60 70 80 90

5 10

Debt as % of GDP 2012 Deficit as % of GDP

2012 Fiscal Balance (% of GDP) vs 2012 Public Debt (% of GDP) (source: IMF WEO, except Ghana)

SLIDE 16

Paris Club then and now

5 10 15 20 25 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Paris Club Agreements

Source: Paris Club