Debt Build-up in Frontier Low-Income Developing Countries (LIDCs) since 2012: Global or Country-specific Factors and Way Forward?
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Summary:
This paper focuses on the debt build-up that frontier low-income developing countries (LIDCs) have faced since 2012. First, it documents a 20-percentage point increase in the external and government debt-to-GDP ratios, a composition shift toward higher non-concessional debt, and a rise in interest rate payments. Second, using panel regressions, it shows that while both global and country-specific factors are correlated with debt-to-GDP ratios over 1998–2016, global factors dominate for the period 2012–16. Third, through a small open-economy model, it shows that the projected tightening in global financial conditions would reduce debt-to-GDP ratios by less than the increase associated with the expected rise in investment.
Series:
Working Paper No. 2019/037
Subject:
Asset and liability management Commodity price indexes Debt relief External debt Fiscal policy Fiscal stance Prices Public debt
English
Publication Date:
February 22, 2019
ISBN/ISSN:
9781484396247/1018-5941
Stock No:
WPIEA2019037
Pages:
40
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