Are We Heading for Another Debt Crisis in Low-Income Countries? Debt Vulnerabilities: Today vs the pre-HIPC Era
IMF Working Papers, April 4, 2023
Source details
- Canonical URL
- Are We Heading for Another Debt Crisis in Low-Income Countries? Debt Vulnerabilities: Today vs the pre-HIPC Era
Other formats
Bibliographic details
- Authors: Chuku Chuku, Prateek Samal, Joyce Saito, Dalia S Hakura, Marcos Chamon, Martin D. Cerisola, Guillaume Chabert, Jeromin Zettelmeyer
- Published: April 4, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400236709.001
Main findings
- There are growing concerns that 25 years after the launch of the HIPC debt relief initiative, many low-income countries are again facing high debt vulnerabilities.
- While solvency and liquidity indicators in most LICs have steadily worsened in recent years, they remain substantially better on average than they were on the eve of HIPC in the mid-1990s.
- If current trends persist, debt vulnerabilities in LICs could (but would not necessarily) reach levels comparable to the pre-HIPC era over the medium- to long-term.
- Today’s more complex creditor landscape makes coordination challenging.
Comparative analysis: today versus pre-HIPC era
- Debt vulnerabilities: current LICs show worsening solvency and liquidity indicators relative to recent years but are on average better than mid-1990s pre-HIPC levels.
- Time reference points explicitly used: 25 years after HIPC launch; mid-1990s as the pre-HIPC benchmark.
- Risk trajectory: persistence of current trends could lead vulnerabilities to approach pre-HIPC levels over the medium- to long-term.
Policy recommendations and institutional implications
- Countries should reduce today’s debt burdens promptly through:
- economic reform,
- lowering the cost of financing,
- debt restructuring on a case-by-case basis.
- The international community should step up efforts to improve debt restructuring processes, including the G20 Common Framework, to ensure debt relief is delivered in a timely and efficient manner where it is needed.
Key statistics and publication metadata
- Pages: 41
- Volume: 2023
- Issue: 079
- Series: Working Paper No. 2023/079
- DOI: https://doi.org/10.5089/9798400236709.001
- Stock No: WPIEA2023079
- ISBN: 9798400236709
- ISSN: 1018-5941
- Authors: Chuku Chuku, Prateek Samal, Joyce Saito, Dalia S Hakura, Marcos Chamon, Martin D. Cerisola, Guillaume Chabert, Jeromin Zettelmeyer
- Date: April 4, 2023
IMF Working Paper — Are We Heading for Another Debt Crisis in Low-Income Countries? Debt Vulnerabilities: Today vs the pre-HIPC Era
Content in this bundle
- Working Paper