## Figure 1.16. Emerging Market Vulnerabilities

## Source details

**Canonical URL:** [Figure 1.16. Emerging Market Vulnerabilities](https://www.imf.org/-/media/files/publications/gfsr/2018/oct/ch1/pdf/figure1-16.pdf)

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- [Markdown version](/-/media/files/publications/gfsr/2018/oct/ch1/pdf/figure1-16.pdf.md)
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### Public sector debt and foreign-currency exposure
- Public sector debt has increased in many emerging market economies in recent years.
- In the Public Sector Heatmap (1998–2008 vs 2013–2018) the following vulnerability metrics are shown: Gross public debt; Cyclically adjusted primary balance; Foreign currency debt; Short-term gross public debt; Primary balance gap.
- Heatmaps show the share of countries failing critical thresholds as a percentage of EM GDP (sample includes 50 emerging market and developing economies; combined GDP excludes China).
- Panel notes: vulnerability indicators and thresholds chosen to minimize combined percentages of missed crises and false alarms, based on an empirical model estimated over 1993–2013 (Ahuja, Wiseman, and Syed 2017). All indicators are scaled by GDP unless specified otherwise.

### Current account imbalances and external leverage
- Current account imbalances have declined since 2013, but external leverage has increased.
- External sector metrics in the External Sector Heatmap include: Current account balance; Reserves as a percent of ARA metric; External debt to exports; Private sector external debt; Public external debt.
- The ARA metric reflects potential balance-of-payment FX liquidity needs in adverse circumstances and is used to assess adequacy of FX reserves against potential FX liquidity drains (see IMF 2015a). The metric used is not adjusted for capital control measures.
- Panels 1 and 2 report combined GDP of countries failing thresholds in percent of aggregate GDP of all sample countries, excluding China; panel 2 data are as of end-2017.

### External debt versus foreign-exchange reserve coverage (Panel 3)
- Scatter shows External debt (percent of exports) on the horizontal axis and Reserves (percent of ARA metric) on the vertical axis (2018 estimated).
- The blue vertical line corresponds to the 50th percentile for the entire sample.
- Labelled country ISO codes appear for individual observations (examples shown): URY, TUN, THA, SRB, RUS, ROU, POL, PHL, PER, MAR, MEX, MYS, KAZ, IDN, IND, HUN, GEO, EGY, HRV, CRI, CHN, BGR, BRA, BLR, ARM, ALB, UKR, TUR, ZAF, PAK, JAM, ECU, COL, ARG, AGO, MUS, VNM, LKA, LBN, JOR, SLV.
- Reserve adequacy range is indicated; axes annotate values including: 0, 10, 20, 30, 40, 50, 60, 70, 80, 90, 110, 130, 150, 170, 200, 250, 300 (percent scale markings as presented).

### Sovereign debt versus foreign-exchange–linked debt (Panel 4)
- Scatter shows Government debt (percent of GDP) on the horizontal axis and Foreign-exchange-linked debt (percent of government debt) on the vertical axis (2018 estimated).
- Blue vertical line corresponds to the 75th percentile; yellow shading corresponds to values between the 25th and 75th percentiles.
- Examples of country ISO codes plotted: AGO, MUS, VNM, URY, UKR, TUN, LKA, ZAF, SRB, PAK, MAR, MEX, LBN, JOR, JAM, IND, HUN, SLV, HRV, CRI, CHN, BRA, ARM, ARG, ALB.
- Axes include annotated values: Government debt axis includes 0, 50, 100, 150, 200, 250, 300; Foreign-exchange-linked debt axis includes 0, 10, 20, 30, 40, 50, 60, 70, 80, 90.

### Key interpretive points
- Several countries have both high external debt and low foreign-exchange reserves.
- It is mostly frontier markets that have both high public debt and a high share of foreign-currency debt.
- Sources cited in the figure: Haver Analytics; national central banks; and IMF staff estimates.

*Source: Figure 1.16 from the provided PDF content.*

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_Source: https://www.imf.org/-/media/files/publications/gfsr/2018/oct/ch1/pdf/figure1-16.pdf_