## Fiscal Transparency, Borrowing Costs, and Foreign Holdings of Sovereign Debt

_IMF Working Papers, August 24, 2018_

## Source details

**Canonical URL:** [Fiscal Transparency, Borrowing Costs, and Foreign Holdings of Sovereign Debt](https://www.imf.org/en/publications/wp/issues/2018/08/24/fiscal-transparency-borrowing-costs-and-foreign-holdings-of-sovereign-debt-46180)

## Other formats

- [Markdown version](/en/publications/wp/issues/2018/08/24/fiscal-transparency-borrowing-costs-and-foreign-holdings-of-sovereign-debt-46180/index.md)
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## Bibliographic details
- Authors: Laurent Kemoe, Zaijin Zhan
- Published: August 24, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484373835.001

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### Summary and scope
- Paper explores effects of fiscal transparency on borrowing costs and on foreign demand for sovereign debt for 33 emerging and developing economies (EMs).
- Measures separate effects of three dimensions of fiscal transparency:
  - openness of the budget process,
  - fiscal data transparency,
  - accountability of fiscal actors.
- Uses multiple indicators, including a constructed indicator based on published data in the IMF’s Government Finance Statistics Yearbook.

### Methodology and data indicators
- Sample: 33 emerging and developing economies (EMs).
- Indicators used:
  - multiple fiscal transparency indicators,
  - a constructed indicator based on data published in the IMF’s Government Finance Statistics Yearbook.
- Outcome variables assessed:
  - sovereign interest rate spreads (EMBI yield spread implied by keywords),
  - foreign holdings of sovereign debt.

### Key findings
- Higher fiscal transparency is associated with:
  - reductions in sovereign interest rate spreads,
  - increases in foreign holdings of sovereign debt.
- Each dimension of fiscal transparency plays a different role in influencing borrowing costs and foreign demand.
- Availability of detailed cross-country comparable fiscal data, especially for balance sheet items, increases foreign investors’ willingness to hold EM sovereign debt.

### Subject areas and keywords (as listed)
- Subjects: Budget planning and preparation; Economic and financial statistics; Emerging and frontier financial markets; Financial markets; Fiscal transparency; Government finance statistics; Public debt; Public financial management (PFM).
- Keywords: Borrowing costs; Budget planning and preparation; debt sustainability issue; EM debt; EMBI index; EMBI yield spread; Emerging and frontier financial markets; Emerging market economies; financial risk; Fiscal transparency; Global; Government finance statistics; influence investors decision making; interest rate; investor inflow; investors holding; risk appetite; WP.

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## Content in this bundle

- **Fiscal Transparency, Borrowing Costs, and Foreign Holdings of Sovereign Debt, WP/18/189, August 2018**
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_Source: https://www.imf.org/en/publications/wp/issues/2018/08/24/fiscal-transparency-borrowing-costs-and-foreign-holdings-of-sovereign-debt-46180_