## Frontier Market Borrowing Binge

_IMF Blog, November 18, 2019_

## Source details

**Canonical URL:** [Frontier Market Borrowing Binge](https://www.imf.org/en/blogs/articles/2019/11/18/blog-chart-of-the-week-frontier-market-borrowing-binge)

## Other formats

- [Markdown version](/en/blogs/articles/2019/11/18/blog-chart-of-the-week-frontier-market-borrowing-binge/index.md)
- [Structured JSON version](/en/blogs/articles/2019/11/18/blog-chart-of-the-week-frontier-market-borrowing-binge/index.json)
- [Bundle manifest](/en/blogs/articles/2019/11/18/blog-chart-of-the-week-frontier-market-borrowing-binge/bundle-manifest.json)

## Bibliographic details
- Authors: The Editors
- Published: November 18, 2019

---

### Key findings
- Hard-currency bond sales by frontier issuers are poised to rise to $38 billion in 2019, close to the record set in 2017.
- Over the five years to mid-2019, the total stock of frontier hard-currency debt tripled to $200 billion.
- For the median frontier borrower:
  - Stock of hard-currency bonds has grown to 7 percent of GDP.
  - Stock of hard-currency bonds has grown to almost half of gross reserves.
  - These figures rose from 3 percent of GDP and 20 percent of reserves in 2014.
- A broader group of low-income developing countries that are having trouble servicing their debt, or are at high risk of debt distress, has doubled since 2013 to 43 percent.

### Risks and drivers
- Rock bottom global interest rates have enabled frontier-market countries to borrow cheaply.
- Excessive or poorly used borrowing increases the risk that countries will have trouble servicing loans and face default.
- A rise in global interest rates would make it even harder for these countries to service overseas obligations.
- The IMF’s latest Global Financial Stability Report highlights the vulnerability of these countries to higher interest rates.

### Policy recommendations
- Make containing debt-related vulnerabilities a top priority.
- Countries at high risk of distress should avoid borrowing from private lenders (as opposed to advanced-economy governments that lend to low-income countries at a discount).
- Focus financing on projects that are likely to generate high returns.
- Improve capacity to borrow from domestic lenders.
- Strengthen management of public investments.

### Implications and outlook
- With appropriate safeguards, frontier economies can use low-cost, hard-currency loans to improve long-term growth prospects and raise living standards.
- Without reforms and prudent borrowing, escalating hard-currency debt stocks increase the risk of debt distress, particularly if global interest rates rise.

*The Editors, November 18, 2019 — Frontier Market Borrowing Binge.*

---


## References

- [Português](https://www.imf.org/pt/News/Articles/2019/11/18/blog-chart-of-the-week-frontier-market-borrowing-binge)
- [https://www.imf.org/wp-content/uploads/2019/11/eng-november-6-frontiercotw.png](https://www.imf.org/wp-content/uploads/2019/11/eng-november-6-frontiercotw.png)
- [Global Financial Stability Report](https://www.imf.org/en/Publications/GFSR/Issues/2019/10/01/global-financial-stability-report-october-2019)
- [Lower for Longer: Rising Vulnerabilities May Put Growth at Risk](https://blogs.imf.org/2019/10/16/lower-for-longer-rising-vulnerabilities-may-put-growth-at-risk/)
- [Chart of the Week: Mapping the World’s Financial Weak Spots](https://blogs.imf.org/category/financial-markets-2/)
- [High Debt Hampers Countries’ Response to a Fast-Changing Global Economy](https://blogs.imf.org/2019/04/10/high-debt-hampers-countries-response-to-a-fast-changing-global-economy/)

_Source: https://www.imf.org/en/blogs/articles/2019/11/18/blog-chart-of-the-week-frontier-market-borrowing-binge_