Financing for the Post-pandemic Recovery: Developing Domestic Sovereign Debt Markets in Central America
IMF Working Papers, December 3, 2021
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- Financing for the Post-pandemic Recovery: Developing Domestic Sovereign Debt Markets in Central America
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Bibliographic details
- Authors: Jean François Clevy, Guilherme Pedras, Esther Perez Ruiz
- Published: December 3, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781616357061.001
Summary
- The pandemic has urged countries around the globe to mobilize financing to support the recovery.
- Central America faces heightened relevance of mobilizing financing because the policy response to cushion the pandemic’s economic and social impact has accentuated pre-existing debt vulnerabilities.
- The paper documents the potential for local currency bond markets to diversify and expand financing for the recovery, lowering bond yields, funding volatility, and exposure to global shocks.
- The paper identifies priority actions, both national and regional, to support market development.
Key findings
- Local currency bond markets can:
- Diversify and expand financing available for the post-pandemic recovery.
- Lower bond yields.
- Reduce funding volatility.
- Decrease exposure to global shocks.
- The context in Central America: pandemic-related policy responses have accentuated pre-existing debt vulnerabilities.
Priority actions and policy implications
- The paper identifies priority actions at both national and regional levels to support development of local currency bond markets (LCBM development).
- Relevant thematic areas for policy action include:
- Government debt management and government securities.
- Public debt and public financial management (PFM).
- Financial institutions, financial markets, financial services, and securities markets.
- Yield curve development and sovereign bond yield management.
Content in this bundle
- Working Paper