Policy Papers

Public Debt Vulnerabilities in Low-Income Countries - The Evolving Landscape

November 3, 2015

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Public Debt Vulnerabilities in Low-Income Countries - The Evolving Landscape, (USA: International Monetary Fund, 0) accessed October 9, 2024

Summary

This is the first joint IMF/World Bank report on public debt vulnerabilities in low income countries (LICs). It examines debt-related developments and their underlying causes since the onset of the global financial crisis. The findings will inform the upcoming review of the IMF/WB debt sustainability framework for LICs.

Over this period, improved macroeconomic performance in LICs, combined with HIPC/MDRI debt relief and high demand for commodities, contributed to improved LIC creditworthiness. At the same time, new borrowing opportunities emerged as a result of the accommodative liquidity conditions in international capital markets, the deepening of domestic financial markets for some LICs, and the growing lending activities of non-Paris Club countries. These new financing possibilities helped mitigate the decline in Paris Club lending to LICs and have been associated with a shift toward greater reliance on non-concessional credit. The changing financing landscape has been most significant for frontier LICs.

Subject: Debt relief, External borrowing, Fiscal risk, HIPC Initiative, Low-income developing countries, Multilateral debt relief initiative, Public debt

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