Access to Market Financing for IDA-eligible Countries—the Role of External Debt and IMF-Supported Programs

Author/Editor:

Alun H. Thomas

Publication Date:

October 1, 2009

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Exclusion restrictions used to identify demand and supply relationships for market financing among IDA recipients (past and present) show that poor credit ratings and high political instability adversely impact the supply of market finance. While the adverse effects of external debt on market access occur at very high levels for IDA-eligible countries, the sizeable debt relief provided in the context of the enhanced HIPC Initiative has significantly raised the likelihood of market access for these countries. For countries that have graduated from IDA financing, the length of country spells in IMF-supported programs raises the likelihood of market access, although this effect is absent for IDA-eligible countries.

Series:

Working Paper No. 2009/217

Subject:

Concessional external borrowing Credit ratings Debt limits Debt sustainability External debt

English

Publication Date:

October 1, 2009

ISBN/ISSN:

9781451873641/1018-5941

Stock No:

WPIEA2009217

Pages:

20

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