Assessing the Risk of Private Sector Debt Overhang in the Baltic Countries

November 1, 2010

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

Between 2000 and 2007 nonfinancial private sector credit expanded rapidly in the Baltic countries, resulting in a non-negligible build-up of debt. Could this legacy debt hold back the economic recovery of the region? This paper analyzes the setting in each of the three countries and, with the help of an experimental Debt Overhang Index (DOI), draws tentative conclusions for domestic demand.

Subject: Consumption, Corporate sector, Debt burden, Financial statements, Income

Keywords: debt, Estonia, Latvia, WP

Pages:
35
Volume:
2010
DOI:
https://doi.org/10.5089/9781455209507.001
Issue:
250
Series:
Working Paper No. 2010/250
Stock No:
WPIEA2010250
ISBN:
9781455209507
ISSN:
1018-5941

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