- International Monetary Fund
- Published Date:
- March 1998
To address the debt burden of low-income countries, the international community has implemented a wide range of mechanisms over the past decade, including the introduction of increasingly concessional rescheduling terms by the Paris Club, culminating in Naples terms in December 1994. For the majority of low-income countries, these traditional mechanisms, in the context of sound economic policies of adjustment and reform, are expected to be sufficient to provide an exit from the debt-rescheduling process. However, for a number of heavily indebted poor countries (HIPCs), traditional debt-relief mechanisms are unlikely to reduce the external debt burden to sustainable levels.
Against this background, the IMF and World Bank staffs jointly developed the framework of the HIPC Initiative, which was adopted in September 1996 with its endorsement by the Interim and Development Committees.33 The Initiative is designed to enable HIPCs that have a strong track record of economic adjustment and reform to achieve a sustainable debt position over the medium term. Central to the Initiative are the country’s continued efforts toward macroeconomic and structural adjustment and social reforms with an emphasis on poverty reduction, including especially through the improvement of basic health care and primary education. These efforts on the country’s side are complemented by a commitment from the international financial community to tackle the country’s external debt problem in a comprehensive and coordinated fashion.
The HIPC Initiative is open to all countries that (1) are eligible for ESAF and IDA funding; and (2) pursue or adopt IMF- and IDA-supported adjustment programs through the fall of 1998, at which time the Boards of the two institutions will review the Initiative.
The basic framework of the Initiative is set up in two stages (Figure A1). The first stage is an initial three-year adjustment period that is required for a country to reach its decision point. During this period, the country needs to establish a strong track record under IMF- and IDA-supported adjustment programs while receiving flow reschedulings on Naples terms from the Paris Club and comparable treatment from other official bilateral and commercial creditors. Based on their existing performance, as many as seven HIPCs could possibly complete the first stage and reach their decision points before the end of 1997. At the decision point, upon successful completion of the first stage, the Boards of the IMF and IDA decide on a country’s eligibility for assistance under the Initiative. This decision is based on the country’s projected debt burden at the completion point, reached typically after another three years of strong policy performance. Countries that cannot achieve medium-term debt sustainability through the full use of traditional debt-relief mechanisms (i.e., a Paris Club stock-of-debt operation on Naples terms, with a net present value (NPV) reduction of up to 67 percent on eligible debt, and comparable action by other nonmultilateral creditors) would be eligible for assistance. In borderline cases, when there is reasonable doubt about the achievement of debt sustainability, a country may opt to defer a request to Paris Club creditors for a Naples terms stock-of-debt operation by another three years. While receiving further flow reschedulings on Naples terms, the country would maintain the possibility for support under the Initiative based on its debt situation at the completion point. All other countries would exit from the rescheduling process already at the decision point by requesting a stock-of-debt operation on Naples terms from the Paris Club.
Figure A1.Initiative for Heavily Indebted Poor Countries—Summary
Debt sustainability under the Initiative is generally defined by ratios for the NPV of public and publicly guaranteed external debt and debt service to exports of goods and nonfactor services in the ranges of 200–250 percent and 20–25 percent, respectively. Specific sustainability targets in the above ranges are set for each country in light of country-specific vulnerability factors, such as the concentration and variability of exports, or fiscal indicators of the burden of debt service. For very open economies (indicated by an exports-to-GDP ratio of at least 40 percent) with a heavy fiscal debt burden despite strong efforts to generate revenue (expressed by a fiscal revenue-to-GDP ratio of at least 20 percent), the target for the NPV of debt-to-exports ratio can be set at a level below 200 percent. For these countries, debt sustainability would be defined as meeting a maximum NPV of debt-to-revenue ratio of 280 percent by the completion point.
Countries that are deemed eligible at the decision point enter the second Stage of the Initiative, during which they establish a second track record of good performance under IMF- and IDA-supported adjustment programs. During the second stage, official bilateral and commercial creditors provide flow reschedulings on enhanced terms, involving an NPV of debt reduction of up to 80 percent (Lyon terms), except for borderline cases, which continue to receive flow reschedulings on Naples terms. The second stage generally lasts for three years, but may be shortened exceptionally for those countries that have already sustained records of strong performance.
At the completion point, all creditors deliver the assistance to which they committed themselves at the decision point, provided the country’s policy performance has remained on track. When the actual NPV of debt-to-exports ratio at the completion point deviates by more than 10 percentage points from the original forecast at the decision point, and when this deviation is due primarily to exogenous and not purely temporary factors, the amount of assistance would be increased (when the outcome is worse than expected), or could be reduced (if the outcome is better than anticipated when a major windfall transforms the economic circumstances of the country concerned).
Assistance at the completion point is delivered without further conditionally and takes the form of a reduction in the present value of the creditor’s claims on the country. One of the Initiative’s guiding principles is broad and equitable participation by all creditors—multilateral, official bilateral, and commercial—in providing enough assistance for the country to achieve debt sustainability. There is broad support from all creditor groups for a proportional approach, flexibly interpreted, toward sharing the costs of the HIPC Initiative between multilateral and bilateral creditor groups. Under this approach, the costs of the HIPC Initiative would be shared by bilateral and multilateral creditor groups in proportion to the present value of their outstanding claims at the completion point.34 For the Paris Club, this would generally involve a stock-of-debt operation with a reduction of up to 80 percent in the NPV of eligible debt, and the country would be required to seek comparable terms from its other official bilateral and commercial creditors.
Multilateral creditors would lake action to reduce the present value of their claims on the country, taking into account the debt relief granted by bilateral creditors and consistent with their preferred creditor status. Each multilateral institution chooses the vehicle to deliver its share of assistance (derived in proportion to its share in the NPV of multilateral claims al the decision point). Some may participate through contributions to the HIPC Trust Fund administered by IDA, others through their own instruments. Also, any creditor may choose to advance contributions from the completion point to the second stage. The IMF’s participation in the Initiative will be financed through the ESAF-HIPC Trust, established in February 1997. The IMF will contribute mainly through grants (or in exceptional circumstances through highly concessional loans) that will be used to retire a country’s obligations failing due to the IMF after the completion point.
In April 1997, Uganda became the first country to reach its decision point and be found eligible for assistance under the HIPC Initiative. In light of Uganda’s exceptional track record of adjustment and reform, the Boards of the IMF and IDA agreed to shorten the second stage to only one year. Thus, Uganda is expected to reach its completion point in April 1998, provided its strong policy performance is maintained, and to receive debt relief equivalent to approximately $340 million in NPV terms. This amount is projected to reduce Uganda’s NPV of debt-to-exports ratio to 202 percent. The IMF will lower the present value of its claims on Uganda by about $70 million, enough to retire an average of 30 percent of Uganda’s current debt service to the IMF over the next nine years.
In September 1997, the Executive Boards of the IMF and IDA decided to extend assistance under the Initiative to Bolivia and Burkina Faso. For Bolivia, the Boards agreed to an NPV debt-to-exports target of 225 percent for a completion point in September 1998. Bolivia is expected to receive assistance equivalent to about $450 million, which represents a reduction of about 13 percent of Bolivia’s debt. The IMF’s share of this assistance is about $30 million; in view of Bolivia’s heavy debt-service burden, both the IMF and IDA intend to front-load use of their assistance. For Burkina Faso, the Boards agreed to an NPV of debt-to-exports target of 205 percent for a completion point in April 2000. Burkina Faso is expected to receive assistance of about $115 million ($10 million from the IMF), representing a debt reduction of about 14 percent. Assistance to both countries is subject to satisfactory assurances of consistent action by other creditors and to continued strong performance under IMF- and IDA-supported programs.
Benin reached its decision point in July 1997, and its debt situation was deemed sustainable without assistance under the Initiative. The Boards of the IMF and IDA have also discussed the eligibility of Côte d’Ivoire, Guyana, and Mozambique on a preliminary basis. These countries are expected to reach their decision points in the second half of 1997.
Asian Development Fund.AfDB.
African Development Bank.AfDF.
African Development Fund.Agreed Minute.
Paris Club document detailing the terms for a rescheduling between creditors and the debtor. It specifies the coverage of debt-service payments (types of debt treated), the cutoff date, the consolidation period, the proportion of payments to be rescheduled, the provisions regarding the down payment (if any), and the repayment schedules for rescheduled and deferred debt. Creditor governments commit to incorporate these terms in the bilateral agreements negotiated with the debtor government that implements the Agreed Minute. Paris Club creditors will agree to reschedulings only with countries that have an IMF upper credit tranche arrangement (Stand-By Arrangement or EFF), a SAF or an ESAF arrangement, or a Rights Accumulation Program.Arrears.
Unpaid or overdue payments. In the context of export credits, arrears are overdue payments by borrowers that have not yet resulted in claims on export credit agencies.AsDB.
Asian Development Bank.BIS.
Bank for International Settlements.Berne Union.
International Union of Credit and Investment Insurers. An association founded in 1934 of export credit insurance agencies, all participating as insurers and not as representatives of their governments. The main purposes of the Berne Union are to work for sound principles of export credit insurance and maintenance of discipline in the terms of credit in international trade. To this end, members exchange information and furnish the Union with information on their activities, consult with each other on a continuing basis, and cooperate closely.Bilateral agreements.
Agreements reached bilaterally between the debtor country and agencies in each of the creditor countries participating in a Paris Club rescheduling. These agreements put into effect the debt restructuring set forth in the Agreed Minute and are legally the equivalent of new loan agreements.Bilateral creditors.
The creditors are governments. Their claims are loans extended, insured, or guaranteed by governments or official agencies, such as export credit agencies. Certain official creditors participate in debt reschedulings under the aegis of the Paris Club.Bilateral deadline.
In the context of Paris Club reschedulings, the date by which all bilateral agreements must be concluded. It is set in the Agreed Minute and is typically about six months later, but can be extended upon request.Bilateral debt.
Loans extended by a bilateral creditor.Brady plan.
Approach adopted in the late 1980s to restructure debt to commercial banks. It emphasizes voluntary market-based operations to reduce debt and debt service. The main feature of these operations is the menu of options offered to creditors, which consists of some combination of a buyback at a significant discount, and the issuance of “Brady bonds” by the debtor country in exchange for banks’ claims. Such operations complement countries’ efforts to restore external viability through the adoption of medium-term structural adjustment programs supported by the IMF and other multilateral and official bilateral creditors.Buyback.
The purchase by a debtor of its own debt, usually at a substantial discount. The debtor reduces its obligations while the creditor receives a once-and-for-all payment. Although in apparent contravention of standard commercial bank loan agreements, some debtors have bought back their own debt on the secondary market.Buyer’s credit.
A financial arrangement in which a bank or financial institution, or an export credit agency in the exporting country, extends a loan directly to a foreign buyer or to a bank in the importing country to finance the purchase of goods and services from the exporting country.CABEI.
Central American Bank for Economic Integration.CAF.
Corporación Andina de Fomento.Cancellation of a loan.
An agreed reduction in the undisbursed balance of a loan commitment.Capitalized interest.
Scheduled interest payments that are converted, through an agreement made with the creditor, into disbursed and outstanding debt. Rescheduling agreements frequently provide for the capitalization of some percentage of interest due during the consolidation period.Capitalization of moratorium interest option.
Option under concessional Paris Club reschedulings where creditors effect the required net present value (NPV) debt relief through a reduction in the applicable interest rate (but a lower reduction than in the debt-service-reduction option) and with a partial capitalization of moratorium interest. Creditors choose this option only rarely. (See concessional rescheduling.)Claims payments.
Payments made to exporters or banks, after the claims-waiting period, by an export credit agency on insured or guaranteed loans when the original borrower or borrowing-country guarantor fails to pay. This is recorded by the agencies as an unrecovered claim.Claims-waiting period.
The period that exporters or banks must wait after arrears occur before the export credit agency will pay on the corresponding claim.Cofinancing.
The joint or parallel financing of programs or projects through loans or grants to developing countries provided by commercial banks, export credit agencies, other official institutions in association with other agencies or banks, or the World Bank and other multilateral financial institutions.Commercial credit.
In the context of the Paris Club, loans originally extended on terms that do not qualify as official development assistance credits. These are typically export credits on market terms or have a relatively small grant element.Commercial interest reference rates (CIRRs).
A set of currency-specific interest rates for major OECD countries. These rates are determined monthly on the basis of the secondary market yield on government bonds with a residual maturity of five years.Commercial risk.
In the context of export credits, the risk of nonpayment by a nonsovereign or private sector buyer or borrower in his or her home currency arising from default, insolvency, and/or a failure to take up goods that have been shipped according to the supply contract (contrasted with transfer risk arising from an inability to convert local currency into the currency in which the debt is denominated or with broader political risk).Commitment.
In the context of export credits, a firm obligation by an export credit agency to lend, guarantee, or insure resources of a specific amount under specific financial terms and conditions and for specific purposes for the benefit of a specific importer, either globally or to entities in a specific country, expressed in an agreement or equivalent contract.
In the context of data reported by export credit agencies, the total amount of loans excluding amounts that are in arrears or on which claims have been paid. Usually includes principal and contractual interest payable by the importing country on disbursed and undisbursed credits, and sometimes includes not only liabilities of the agency but also uninsured parts of the loan. Therefore, “commitments” are almost always larger than the face value of the loan and sometimes larger than the agency’s total exposure.Commitment charge (or fee).
This is the charge made for holding available the undisbursed balance of a loan commitment. Typically, it is a fixed-rate charge (e.g., 1.5 percent a year) calculated on the basis of the undisbursed balance.Comparable treatment.
An understanding in a debt-restructuring agreement with the Paris Club creditors that the debtor will secure at least equivalent debt relief from other creditors.Completion point.
In the context of the HIPC Initiative, a point at which the country concerned completes a second (generally) three-year track record of good performance under adjustment programs supported by the IMF and the World Bank after reaching the decision point (see, below, decision point). Additional measures committed at the decision point will be implemented to assist the country to reach a sustainable level of debt at that time.Concessionality level.
See grant element.Concessional rescheduling.
Rescheduling of debt with partial debt reduction. In the context of the Paris Club, concessional rescheduling terms have been granted to low-income countries since October 1988 with a reduction in the net present value (NPV) of eligible debt of up to one-third (Toronto terms); since December 1991, with an NPV reduction of up to one-half (London terms or “enhanced concessions” or “enhanced Toronto” terms); and, since January 1995, with an NPV reduction of up to two-thirds (Naples terms). In the context of the HIPC Initiative, creditors agreed in November 1996 to increase the NPV reduction to up to 80 percent (Lyon terms). Such reschedulings can be in the form of flow reschedulings or stock-of-debt operations. While the terms (grace period and maturity) are standard, creditors can choose from a menu of options to implement the debt relief. For full details, see Section V, Table 15.Consensus.
See OECD Consensus.Consolidated amounts or consolidated debt.
The debt-service payments and arrears, or debt stock, rescheduled under a Paris Club rescheduling agreement.Consolidation period.
In Paris Club rescheduling agreements, the period in which debt-service payments to be rescheduled (the “current maturities consolidated”) have fallen or will fall due. The beginning of the consolidation period may precede, coincide with, or come after the date of the Agreed Minute. The end of the consolidation period is generally the end of the month in which the IMF arrangement expires, on the basis of which the rescheduling takes place.Cover.
Provision of export credit guarantee or insurance against risks of payment delays or nonpayments relating to export transactions. Cover is usually, though not always, provided for both commercial risk and political risk. In most cases, cover is not provided for the full value of future debt-service payments; the percentage of cover is typically between 90 percent and 95 percent. (See also quantitative limits.)Coverage.
In the context of rescheduling agreements, the debt service or arrears rescheduled. Comprehensive coverage implies the inclusion of most or all eligible debt service and arrears.Credit guarantee.
Commitment by an export credit agency to reimburse a lender if the borrower fails to repay a loan. The lender pays a guarantee fee. While guarantees could be unconditional, they usually have conditions attached to them, so that in practice there is little distinction between credits that are guaranteed and credits that are subject to insurance.Credit insurance.
The main business of most export credit agencies is insurance of finance provided by exporters or commercial creditors (although some major agencies lend on their own account). Insurance policies provide for the export credit agency to reimburse the lender for losses up to a certain percentage of the credit covered and under certain conditions. Lenders or exporters pay a premium to the export credit agency. Insurance policies typically protect the lender against political or transfer risks in the borrowing country that prevent the remittance of debt-service payments.Current maturities.
In the context of rescheduling agreements, principal and interest payments falling due in the consolidation period.Cutoff date.
The date (established at the time of a country’s first Paris Club rescheduling) before which loans must have been contracted in order for their debt service to be eligible for rescheduling. New loans extended after the cutoff date are protected from future rescheduling (subordination strategy). In exceptional cases, arrears on post-cutoff date debt can be deferred over short periods of time in rescheduling agreements.De minimis creditors (or clause).
Minor creditors that are exempted from debt restructuring to simplify implementation of the Paris Club rescheduling agreements. Their claims are payable in full as they fall due. An exposure limit defining a minor creditor is specified in each Agreed Minute, typically ranging from SDR 250,000 to SDR 1 million of consolidated debt.Debt- and debt-service-reduction (DDSR) operations.
Debt-restructuring agreements typically between sovereign states and consortia of commercial bank creditors involving a combination of buyback and exchange of eligible commercial debt for financial instruments at a substantial discount (simple cash buyback) or for new bonds featuring a net present value reduction. In some instances, the principal portion of new financial instruments is fully collateralized with U.S. treasury zero-coupon bonds, while interest obligations are also partially secured. DDSR operations are characterized by a “menu approach,” allowing individual creditors to select from among several DDSR options. Under the Brady plan of March 1989, some of these arrangements have been supported by loans from official creditors.Debt-equity swap.
An arrangement that results in the exchange of debt claims, usually at a discount, for equity in an enterprise. An investor purchases title to a foreign-currency-denominated debt in a secondary market at a substantial discount. Under the debt-equity swap program, the debtor country government will exchange the debt for local currency at face value (with the government normally retaining some funds as a means of capturing a portion of the secondary market discount). The investor will then carry out an approved equity investment project. The difference between the face value and the market value of the debt provides an incentive to the investor. The debtor country government, for its part, must be prepared to spend the financial resources in domestic currency to retire debt.Debt-for-development swap.
Financing part of a development project through the exchange of a foreign-currency-denominated debt for local currency, typically at a substantial discount. The process normally involves a foreign nongovernmental organization (NGO) that purchases the debt from the original creditor at a substantial discount using its own foreign currency resources, and then resells it to the debtor country government for the local currency equivalent (resulting in a further discount). The NGO in turn spends the money on a development project, previously agreed upon with the debtor country government.Debt-for-nature swap.
Similar to a debt-for-development swap, except that the funds are used for projects that improve the environment.Debt forgiveness or debt reduction.
The extinction of a debt, in whole or in part, by agreement between debtor and creditor. Debt reduction in the context of concessional reschedulings from the Paris Club is applied to the net present value of eligible debt.Debt-reduction option.
Option under concessional Paris Club reschedulings where creditors effect the required debt relief in net present value terms through a reduction of the principal of the consolidated amount. A commercial interest rate and standard repayment terms apply to the remaining amounts. (See concessional reschedulings,) For precise terms, see Section V, Table 15.Debt refinancing.
Procedure by which overdue payments or future debt-service obligations on an officially supported export credit are paid off using a new “refinancing” loan. The refinancing loan can be extended by the export credit agency, by a governmental institution, or by a commercial bank (with the guarantee of the export credit agency).Debt rescheduling.
See rescheduling.Debt restructuring.
Any action by a creditor that alters the terms established for repayment of debt in a manner that provides for smaller near-term debt-service obligations (debt relief)- This includes rescheduling, refinancing, operations to reduce debt and debt service, buybacks, and forgiveness.Debt-service (-to-exports) ratio.
A key indicator of a country’s debt burden. Scheduled debt service (interest and principal payments due) during a year, expressed as a percentage of exports (typically of goods and nonfactor services) for that year.Debt-service-reduction option.
Option under concessional Paris Club reschedulings where creditors effect the required debt relief in net present value terms through a reduction in the applicable interest rate. (See concessional rescheduling.) For precise terms, see Section V, Table 15.Debt sustainability.
As defined in the context of the HIPC Initiative, the position of a country when (1) the net present value (NPV) of the ratio of (public and publicly guaranteed) debt to exports and (2) the ratio of debt service to exports are below certain country-specific target levels within ranges of 200-250 percent and 20-25 percent, respectively. The specific sustainability targets in the above ranges are set for each country in light of the country-specific vulnerability factors, such as the concentration and variability of exports, and with particular attention to the fiscal burden of external debt service. And, (3) for highly open economies (indicated by an exports-to-GDP ratio of at least 40 percent) making a strong fiscal effort (expressed by a fiscal revenue-to-GDP ratio of at least 20 percent), the country-specific target for the NPV of the ratio of debt to exports is selected at a level consistent with meeting an NPV of a ratio of debt to revenue of 280 percent.Debt sustainability analysis.
A study of a country’s long-term debt situation jointly undertaken by the staffs of the IMF and the World Bank and the country concerned, in consultation with creditors. A country’s eligibility for support under the HIPC Initiative is determined on the basis of such an analysis.Debtor Reporting System (DRS).
Statistical reporting system maintained by the World Bank to monitor the debt of developing countries on the basis of reports from debtor countries. Basis for the annual World Bank report, Global Development Finance (formerly, World Debt Tables).Decision point.
In the context of the HIPC Initiative, the point at which a country’s eligibility for assistance under the HIPC Initiative is determined on the basis of the debt sustainability analysis. In order to reach a decision point, a country needs to establish a strong track record in the context of a three-year adjustment program supported by the IMF and the World Bank while receiving flow rescheduling on Naples terms from Paris Club creditors and comparable treatment from other official bilateral and commercial creditors. The international community enters into a commitment at the decision point to deliver assistance at the completion point provided the debtor adheres to its policy commitments.Deferred payments.
In the context of Paris Club reschedulings, obligations that are not consolidated but postponed nonconcessionally, usually for a short time, as specified in the Agreed Minute.Development Assistance Committee (DAC) of the OECD.
Established in I960 as the Development Assistance Group with the objective of expanding the volume of resources made available to developing countries and to improve their effectiveness. The DAC periodically reviews both the amount and the nature of its members’ contributions to aid programs, both bilateral and multilateral. The DAC does not disburse assistance funds directly, but is concerned instead with promoting increased assistance efforts by its members. The members of the DAC are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden. Switzerland, the United Kingdom, the United States, and the Commission of the European Communities.EDF.
Euopean Development Fund.Effectively rescheduled debt.
The proportion of total payments covered by a rescheduling agreement that is rescheduled or deferred until after the consolidation period.EIB.
Euopean Investment Bank.Eligible debt or debt service.
In the context of the Paris Club, debt that can be rescheduled, namely, debt that is contracted before the cutoff date, with maturities of one year or longer.Enhanced concessions (or enhanced Toronto terms).
See concessional rescheduling.Enhanced Structural Adjustment Facility (ESAF).
See Structural Adjustment Facility (SAF).ESAF-HIPC Trust.
Trust established by the IMF in February 1997 to provide assistance to the countries deemed eligible for assistance under the HIPC Initiative by the Boards of the IMF and the World Bank. Through this trust, the IMF will provide grants (or, in exceptional circumstances, highly concessional loans) that will be used to retire a country’s obligations falling due to the IMF after the completion point.Escrow accounts.
Accounts in offshore banks (outside the debtor country) through which a portion of the export proceeds of a debtor is channeled. Typically involve balances of one year to cover future debt-service payments. Creditors who are the beneficiaries of such accounts thus obtain extra security for their loans and effective priority on debt service.EU.
European Union.Export credit.
A loan extended to finance a specific purchase of goods or services from within the creditor country. Export credits extended by the supplier of goods are known as supplier’s credits; export credits extended by the supplier’s bank are known as buyer’s credits. (See also officially supported export credits.)Exposure.
In the context of export credits, the total amount of a country’s debt held by an export credit agency, including commitments, arrears, and unrecovered claims. Implicitly, a measure of the total possible financial cost to the agency of a complete default by the borrowing country.Extended Fund Facility (EFF).
An IMF lending facility established in 1974 to assist member countries in overcoming balance of payments problems that stem largely from structural problems and require a longer period of adjustment than is possible under a Stand-By Arrangement. A member requesting an extended arrangement outlines its objectives and policies for the whole period of the arrangement (typically 3 years) and presents a detailed statement each year of the policies and measures it plans to pursue over the next 12 months. The phasing and performance criteria are comparable to those of Stand-By Arrangements, although phasing on a semiannual basis is possible. Countries must repay EFF resources over 10 years including a grace period of 4½ years. (See Stand-By Arrangement.)Flow rescheduling.
In the context of the Paris Club, the rescheduling of specified debt service falling due during the consolidation period and, in some cases, of specified arrears outstanding at the beginning of the consolidation period. (See stock-of-debt operation.)Goodwill clause.
Clause used in Paris Club agreements under which creditors agree in principle, but without commitment, to consider favorably subsequent debt-relief agreements for a debtor country that remains in compliance with the rescheduling agreement as well as with its IMF arrangement and that has sought comparable debt relief from other creditors. The clause can be for a future flow rescheduling or a stock-of-debt operation.Grace period and maturity.
During the grace period of a loan, no principal repayments (amortization) need to be made; only interest payments are due. Maturity refers to the total repayment period, including the grace period. In the context of Paris Club reschedulings, periods until the first and last payment dates are measured typically from the midpoint of the consolidation period.Graduated payments (or “blended payments”).
In the context of Paris Club reschedulings, the term refers to a repayment schedule where principal repayments (and therefore total payments) gradually increase over the repayment period, reflecting an expected improvement in the repayment capacity of a debtor country. Creditors have made increasing use of the graduated payments, replacing flat payment schedules where equal amounts of principal repayments were made over the repayment period; from the creditor perspective, graduated payments provide for principal repayments starting earlier, and, from the debtor perspective, they avoid a large jump in debt service falling due.Grant element.
Measure of concessionality of a loan, calculated as the difference between the face value of the loan and the sum of the discounted future debt-service payments to be made by the borrower expressed as a percentage of the face value of the loan.Grantlike flows.
Transactions involving the sale of commodities against payment in the recipient country’s currency or loans in a foreign currency repayable in the recipient country’s currency. These transactions are treated as grants in the OECD-DAC statistics because their repayment does not require a flow of foreign currency across the exchanges. They are nevertheless counted as external debt, because the creditor is nonresident and subsequent use of the repayments by the creditor involves forgoing the corresponding inflow of foreign exchange.Heavily indebted poor countries (HIPCs).
Group of 41 developing countries established for analytical purposes in 1995. It includes 32 countries with a 1993 GNP per capita of $695 or less and whose 1993 present value of debt to exports is higher than 220 percent or whose present value of debt to GNP is higher than 80 percent (World Bank classification of severely indebted low-income countries). Also includes 9 countries that have received concessional reschedulings from Paris Club creditors (or are potentially eligible for such rescheduling).Helsinki package.
Agreement reached in 1978 by OECD participants of the Consensus limiting the use of tied-aid credits in certain countries to projects that would not be commercially viable without an aid element. The agreement also set up mechanisms for implementing the new rules. (See OECD Consensus.)Initiative for Heavily Indebted Poor Countries (HIPC Initiative).
Framework for action to resolve the external debt problems of heavily indebted poor countries (HIPCs) that was developed jointly by the IMF and the World Bank and was adopted in the fall of 1996. The Initiative envisages comprehensive action by the international financial community, including multilateral institutions, to help eligible HIPCs achieve debt sustainability, provided they build a track record of strong policy performance.HIPC Trust Fund.
Trust Fund administered by the International Development Association to provide debt relief through giants to eligible HIPCs on debt owed to participating multilaterals. It will either prepay, or purchase, a portion of the debt owed to a multilateral creditor and cancel such debt, or pay debt service, as it comes due. The HIPC Trust Fund receives contributions from participating multilateral creditors and from bilateral donors. Contributions can be earmarked for debt owed by a particular debtor or to a particular multilateral creditor. Donors can also provide contributions to an unallocated pool and would participate in decisions regarding the use of these unallocated funds. The Trust Fund allows multilateral creditors to participate in the Trust Fund in ways consistent with their financial policies and aims to address the resource constraints for certain multilateral creditors. (See also ESAF-HIPC Trust.)Houston terms.
See lower-middle-income-country terms.IBRD.
Internation Bank for Reconstruction and Development.ICSID.
International Center for the Settlement of Investment Disputes.IDB.
Inter-American Development Bank.IFAD.
International Fund for Agricultural Development.IFC.
International Finance Corporation.IMF arrangement.
Agreement between the IMF and a member country on the basis of which the IMF provides financial assistance to a member country seeking to redress its balance of payments problems and to help cushion the impact of adjustment. Nonconcessional resources are provided mainly under Stand-By Arrangements and the Extended Fund Facility (EFF), and concessional resources are provided under the Enhanced Structural Adjustment Facility (ESAF).Implementing agreements.
See bilateral agreements.Interest rate swap.
An agreement to swap the debt-servicing liability of a loan with a fixed interest rate with that of a loan with a variable interest rate. For example, the government of a developing country may be able to borrow at comparatively better terms at variable rates than at fixed rates, while for an enterprise in an industrial country, the inverse may be true. Each may prefer its liabilities in the other form; they therefore borrow and arrange a swap. Normally, the differentia) in the rates is insured with a broker to protect the sounder borrower.International Development Association (IDA).
IDA is the concessional lending arm of the World Bank Group. IDA assistance is available to low-income member countries.Late interest.
Interest accrued on principal and interest in arrears.London Club.
A group of commercial banks that join together to negotiate the restructuring of their claims against a particular sovereign debtor. There is no organizational framework for the London Club comparable to that of the Paris Club.London terms.
See concessional rescheduling.Long-maturities option.
In the context of the Paris Club, a nonconcessional option in concessional reschedulings under which the consolidated amount is rescheduled over a long period of time, but without a reduction in the net present value of the debt.Low-income countries.
In the context of the Paris Club, countries eligible to receive concessional terms. The Paris Club decides eligibility on a case-by-case basis, but these include only countries eligible to receive highly concessional IDA credits from the World Bank. In the context of the World Bank classification, low-income countries are those with a GNP per capita income of no more than $765 in 1995.Lower-middle-income-country terms.
In the context of the Paris Club, refers to the rescheduling terms granted, since September 1990, to lower-middle-income countries. These terms are nonconcessional and originally provided for flat repayment schedules, but in recent years graduated payment schedules have often been agreed upon for commercial credits, namely, with a maturity of up to 18 years, including a grace period of up to 8 years. Official development assistance credits are rescheduled over 20 years, including a grace period of up to 10 years. This set of rescheduling terms also includes the limited use of debt swaps on a voluntary basis.Lyon terms.
See concessional rescheduling.Maturity.
Grace period plus repayment period. See grace period and maturity.Middle-income countries.
In the context of the Paris Club, countries not considered lower-middle-income or low-income. These countries receive nonconcessional rescheduling terms, originally with flat repayment schedules, but in the 1990s increasingly with graduated payment schedules that have a maturity of up to 15 years and a grace period of 2–3 years for commercial credits. Official development assistance credits are rescheduled over 10 years, including a grace period of 5-6 years. In the context of the World Bank classification, middle-income countries are those with a GNP per capita income in 1995 of between $766 and $9, 386.MIF.
Multilateral Investment Fund.MIGA.
Multilateral Investment Guarantee Agency.Mixed credits.
Credits containing an aid element, in the form of either a grant or a subsidized interest rate.Moratorium interest.
Interest charged on rescheduled debt. In the Paris Club, the moratorium interest rate is negotiated bilaterally by the borrowing country with each individual creditor and therefore differs from one creditor to the next. In the London Club, where all creditors are deemed to have access to funds at comparable rates, the moratorium interest rate applies equally to all rescheduled obligations under a given agreement.Multilateral creditors.
These creditors are multilateral institutions such as the IMF and the World Bank, as well as other multilateral development banks.Multiyear rescheduling agreement (MYRA).
An agreement granted by official creditors that covers consolidation periods of two or more years in accordance with multiyear IMF arrangements, such as the EFF and the ESAF. It is carried out through a succession of shorter consolidations (tranches) that are implemented after certain conditions specified in the Agreed Minute are satisfied. The conditions generally include full implementation to date of the rescheduling agreement and the continued implementation of the IMF arrangements.Naples terms.
See concessional rescheduling.Net (capital) flows.
Loan disbursements minus principal repayments during the same period.Net present value (NPV) of debt.
The discounted sum of all future debt-service obligations (interest and principal) on existing debt. Whenever the interest rate on a loan is lower than the discount rate, the resulting NPV of debt is smaller than its face value, with the difference reflecting the grant element. The discount rates used in the context of the HIPC Initiative reflect market interest rates.Net present value (NPV) of the ratio of debt to exports.
Net present value (NPV) of debt as a percentage of exports (usually of goods and nonfactor services).Net (capital) transfers.
Loan disbursements minus debt-service payments (principal repayment and interest) during the same period.Nonconsolidated debt.
This is debt that is wholly or partly excluded from rescheduling. It has to be repaid on the terms on which it was originally provided, unless creditors agree to defer it.OECD.
Organization for Economic Cooperation and Development.OECD Consensus.
Formally, the Arrangement on Guidelines for Officially Supported Export Credits, a framework of rules governing export credits agreed to by members of the OECD’s export credit group.OECD Export Credit and Credit Guarantees Group, OECD Trade Committee.
A forum in which 22 OECD member countries participate in the Arrangement on Guidelines for Officially Supported Export Credits (the Consensus). Mexico and Turkey also attend as observers. Aside from coordinating export credit terms, the OECD Export Credit Group has also served as a forum for exchanging information on debtor country situations and agencies’ practices; at the meetings of the group, the governmental authorities of the agencies are represented.Official creditors.
Public sector lenders. Some are multilateral, namely, international financial institutions, such as the IMF, the World Bank, and regional development banks. Others are bilateral, namely, agencies of individual governments (including central banks), such as export credit agencies.Official development assistance (ODA).
Flows of official financing defined by the OECD to meet the following test: (1) its main objective is to promote the economic development and welfare of the developing countries, and (2) it is concessional in character and contains a grant element of at least 25 percent (using a fixed discount rate of 10 percent). ODA is provided to developing countries and to multilateral institutions by OECD-DAC members and other countries through their official agencies, including state and local governments, or by their executive agencies. ODA is also provided to developing countries by multilateral institutions. Lending by export credit agencies—with the pure purpose of export promotion—is excluded.Official development finance (ODF).
Total official flows to developing countries excluding officially supported export credits (the latter are regarded as primarily trade promoting rather than development oriented). Comprises official development assistance (ODA) and other official development finance flows.Official export credit agency.
An agency within a creditor country that provides loans, guarantees, or insurance to finance the specific purchase of goods for export. (See officially supported export credits.)Officially supported export credits.
Loans or credits to finance the export of goods and services for which an official export credit agency in the creditor country provides guarantees, insurance, or direct financing. The financing element—as opposed to the guarantee/insurance element—may derive from various sources. It can be extended by an exporter (supplier’s credit), or through a commercial bank in the form of financial trade-related credit provided either to the supplier (also supplier’s credit) or to the importer (buyer’s credit). It can also be extended directly by an export credit agency of the exporting countries, usually in the form of medium-term finance as a supplement to resources of the private sector, and generally for export promotion for capital equipment and large-scale, medium-term projects. Under OECD Consensus rules covering export credits with a duration of two years or more, up to 85 percent of the export contract value can be financed.Other official development financing (other ODF).
Development-oriented official flows that do not qualify as official development assistance. Bilateral “other” ODF includes mainly refinancing loans and the capitalization of interest in debt-restructuring agreements.Paris Club.
Informal group of creditor governments that has met regularly in Paris since 1956 to reschedule bilateral debts; the French treasury provides the secretariat. Creditors meet with a debtor country to reschedule its debts as part of the international support provided to a country that is experiencing debt-servicing difficulties and is pursuing an adjustment program supported by the IMF. The Paris Club does not have a fixed membership, and its meetings are open to all official creditors that accept its practices and procedures. The core creditors are mainly OECD member countries, but other creditors attend as relevant for a debtor country. Russia became a member in September 1997.Political risk.
The risk of borrower country government actions that prevent, or delay, the repayment of export credits. Many export credit agencies also include under political risk such events as war, civil strife, revolution, and other disturbances that prevent the exporter from performing under the supply contract or the buyer from making payment. Some also include physical disasters such as cyclones, floods, and earthquakes.Post-cutoff date debt.
See cutoff date.Premium.
In the context of export credits, the amount paid, usually in advance, by insured lenders as the price of the insurance. An important source of income for export credit agencies.Previously rescheduled debt.
Debt that has been rescheduled on a prior occasion. This type of debt was generally excluded from further rescheduling in both the Paris and London Clubs until 1983. Since then, however, previously rescheduled debt has frequently been rescheduled again for countries facing acute payment difficulties.Provisioning.
Allowance made in some export credit agencies’ accounts for the financial cost of possible losses on their exposure. Some agencies provision on all new business; some reject the idea of provisioning against political risk, maintaining that all sovereign debt will ultimately be repaid.Quantitative (or cover) limits.
Mechanisms by which export credit agencies restrict the amount of cover offered to a particular country. They could, for example, take the form of limits on the total cover for a country or on the amount of cover offered for individual transactions. The limit set is an important means of reducing exposure to countries considered to be risky.Rights Accumulation Program.
An IMF program of assistance established in 1990 whereby a member country with long overdue obligations to the IMF, while still in arrears, may accumulate “rights” toward a future disbursement from the IMF on the basis of a sustained performance under an IMF-monitored adjustment program. Countries incurring arrears to the IMF after end-1989 are not eligible for assistance under this program. Rights Accumulation Programs adhere to the macroeconomic and structural policy standards associated with programs supported by the EFF and the ESAF, and performance is monitored, and rights accrue, quarterly.Recoveries.
Repayments made to export credit agencies by borrowing countries after agencies have paid out claims to exporters or banks on the loans concerned.Refinancing.
See debt refinancing.Reinsurance.
Reinsurance by export credit agencies of amounts originally insured by a private sector insurer or commercial bank (some large official agencies are also providing reinsurance for smaller official agencies). For example, a private insurer might keep the commercial risk of a loan on its own books, but seek reinsurance against specific political risks.Repayment period.
The period during which repayments under the financing are due to be made; this period usually starts after the end of performance under the commercial contract.Rescheduling.
Debt restructuring in which specific arrears and future debt service (falling due during the consolidation period) are consolidated and form a new loan, with terms defined at the time of the rescheduling. Rescheduling debt is one means of providing a debtor with debt relief through a delay and, in the case of concessional rescheduling, a reduction in debt-service obligations. For official bilateral creditors, the main forum for negotiating debt rescheduling is the Paris Club. Rescheduling is typically provided by the international financial community in order to support a debtor country’s economic adjustment program.Rescheduling agreement.
An agreement between a creditor, or a group of creditors, and a debtor to reschedule debt. The agreement may also include other debt-restructuring strategies such as write-offs or swaps.Short-term commitments or credits.
Commitments that provide for repayment within a short period, usually six months (although some export credit agencies define short-term credits as those with repayment terms of up to one or two years). Usually relating to sales of consumer goods and raw materials and usually taking the form of policies for whole-turnover or comprehensive coverage. Short-term debt in the context of the Paris Club has a maturity of up to one year.Special accounts.
In the context of the Paris Club, deposits into special accounts were first introduced in 1983 for debtor countries that had a history of running into arrears. After signing the Agreed Minute, the debtor makes monthly deposits into an earmarked account at the central bank of one of the creditor countries. The deposit amounts are roughly equal to the moratorium interest that is expected to fall due on the rescheduled debt owed to all Paris Club creditors combined and any other payments falling due during the consolidation period. The debtor then draws on the deposited funds to make payments as soon as the bilateral agreements with the individual Paris Club creditors are signed and as other payments fall due.Standard terms.
See middle-income countries.Stand-By Arrangement.
An IMF lending facility established in 1952 through which a member country can use IMF financing up to a specified amount to overcome short-term or cyclical balance of payments difficulties. Installments are normally phased on a quarterly basis, with their release conditional upon the member’s meeting performance criteria and the IMF’s completing periodic reviews. Performance criteria generally cover credit policy, government or public sector borrowing requirements, trade and payment restrictions, foreign borrowing, and reserve levels. These criteria allow both the member and the 1Mb to assess the member’s progress in policy implementation and may signal the need for further corrective policies. Stand-By Arrangements typically cover a period of 12-18 months (although they can extend up to 3 years). Repayments are to be made over 5 years including a grace period of 3¼ years.Standstill.
This is an interim agreement between a debtor country and its commercial banking creditors that principal repayments of medium- and long-term debt will be deferred and that short-term obligations will be rolled over, pending agreement on a debt reorganization. The objective is to give the debtor continuing access to a minimum amount of trade-related financing while negotiations take place and to prevent some banks from abruptly withdrawing their facilities at the expense of others.Stock-of-debt operation.
In the context of the Paris Club, rescheduling of the eligible stock of debt outstanding. These were granted for Egypt and Poland in 1991 and, partially, for Russia and Peru in 1996 and are being implemented for low-income countries under Naples terms (see concessional reschedulings), provided that certain conditions are met (the debtor country has implemented earlier flow rescheduling agreements for at least three years and has an appropriate arrangement with the IMF; all creditors choose a concessional rescheduling option). Six countries received stock-of debt operations on Naples terms between 1995 and mid-1997 (Benin, Bolivia, Burkina Faso, Guyana, Mali, and Uganda).Structural Adjustment Facility (SAF)/Enhanced Structural Adjustment Facility (ESAF).
The SAF, established in 1986 and no longer operational, and the ESAF, established in 1987 and extended and enlarged in 1993, are the concessional loan windows of the IMF. These facilities are available to low-income member countries facing protracted balance of payments problems and provide resources at an annual interest rate of 0.5 percent. They are repayable over 10 years, including a grace period of 5½ years.Subordination strategy.
Policy of Paris Club creditors that loans extended after the cutoff date are not subject to rescheduling; therefore, pre-cutoff date loans are effectively subordinated to new lending.Supplier’s credit.
A financing arrangement under which an exporter extends credit to the buyer in the importing country.Terms-of-reference rescheduling.
Paris Club rescheduling involving only a small number of creditors. Typically this does not require a rescheduling meeting between the debtor country and its creditors, with the agreement being reached through an exchange of letters.Tied-aid loans.
Bilateral loans that are linked to purchases from the country providing the loans.Toronto terms.
See concessional rescheduling.Transfer risk.
The risk that a borrower will not be able to convert local currency into foreign exchange, and so will be unable to make debt-service payments in foreign currency. The risk would usually arise from exchange restrictions imposed by the government in the borrower’s country. This is a particular kind of political risk.Uncovered claims.
See claims payments.
|Part I: Developing Countries and Territories|
(Official development assistance)
|Part II: Countries and Territories in Transition (Official aid)|
|Least developed countries||Other low-income countries (Per capita GNP < $765 in 1995)||Lower-middle-income countries (Per capita GNP $666-$3,035 in 1995)||Upper-middle income countries (Per capita GNP $3,036-$9,385 in 1995)||High-income countries (Per capita GNP > $9,385 in 1995)||Central and Eastern European countries and countries of the former Soviet Union||More advanced developing countries and territories|
|Afghanistan, Islamic State of||Albania*||Algeria||Morocco||Brazil||Aruba**||Belarus*||Bahamas, The|
|Bangladesh||Bosnia and Herzegovina||Bolivia||Niue||Cook Islands||Cayman Islands**||Czech. Rep.*||Kuwait|
|Benin||Botswana||Palau Islands||Croatia||Chinese Taipei||Estonia*||Qatar|
|Burkina Faso||China||Costa Rica||Administered||Malaysia||Falkland Islands**||Latvia*||United Arab Emirates|
|Burundi||Congo, Rep. of||Cuba||Areas||Mauritius||French Polynesia**||Lithuania*|
|Cape Verde||Georgia*||Dominican Rep.||Papua New Guinea||Mexico||Hong Kong**||Poland*|
|Central African Rep.||Ghana||Ecuador||Nauru||Israel||Romania*|
|Chad||Guyana||Egypt||Paraguay||St. Lucia||Korea, Rep. of||Russia*|
|Comoros||Honduras||EI Salvador||Peru||South Africa||Macao**||Slovak Rep.*|
|Congo, Dem. Rep. of||India||Fiji||Philippines||Trinidad and Tobago||Netherlands Antilles**||Ukraine*|
|Djibouti||Kenya||Grenada||St. Vincent and Grenadines||Uruguay|
|Equatorial Guinea||Krygyz Rep.*||Guatemala||New Caledonia**|
|Eritrea||Mongolia||Indonesia||Suriname||Threshold for World||Northern Marianas|
|Ethiopia||Nicaragua||Iran, Islamic Rep. of||Swaziland||Bank Loan Eligibility||Virgin Islands**|
|Gambia, The||Nigeria||Syria||($5,295 in 1995)|
|Haiti||Sri Lanka||Jordan||Tokelau**||Antigua and Barbuda|
|Lao People’s Dem. Rep.||Vietnam||Korea, Dem. Rep. of||Tunisia||Bahrain|
|Madagascar||Macedonia, former Yugoslav Rep. of||Uzbekistan*||Malta|
|Maldives||Marshall Islands||Wallis and Futuna**||Oman|
|Mali||Micronesia, Federated States of||St. Helena**|
|Mauritania||Yugoslavia, Federal Rep. of||St. Kitts and Nevis|
|Niger||Turks and Caicos Islands**|
|Sâo Tomé and Príncipe|
|Yemen, Rep. of|
Central and Eastern European countries of the former Soviet Union.
|(In percent of group total)|
|Gross bilateral official disbursements2|
|North Africa and Middle East||22.2||28.4||18.9||17.6||22.0||15.7|
|Other (Oceania and unallocated)||9.7||10.1||9.5||10.9||8.9||12.5|
|By income group|
|Least developed countries||14.6||12.8||12.3||11.2||10.3||10.5|
|Gross bilateral Oil A disbursements3|
|North Africa and Middle East||16.1||26.1||16.6||14.1||15.1||10.4|
|Other (Oceania and unallocated)||15.7||13.7||16.6||18.2||17.0||18.4|
|By income group|
|Least developed countries||22.8||18.3||19.8||19.6||20.9||20.4|
|Lower-middle-in come countries||23.1||22.9||24.9||27.1||25.1||26.0|
|(In billions of U.S. dollars)|
|Gross bilateral ODA disbursements3||44.7||55.7||49.3||48.5||47.7||48.0|
|North Africa and Middle East||7.2||14.6||8.2||6.8||7.2||5.0|
Total official flows defined as grants, gross ODA loans, and other gross contractual lending, including official export credits.
|Annual Average||Prov.||Annual Average||Prov.|
|(In millions of U.S. dollars)||(In percent of exports of goods and services)|
|Central African Republic||40||46||22||12||22.3||23.8||9.6||5.3|
|Congo, Democratic Republic of1||139||72||-1||-103||6.7||1.8||…||-5.0|
|Congo, Republic of||35||27||-21||10||4.0||2.8||-1.7||0.6|
|Lao People’s Democratic Republic1||22||66||104||96||31.1||35.9||23.1||19.2|
|Sâo Tomé and Príncipe||7||20||12||17||87.1||203.6||89.8||116.4|
|Yemen. Republic of1||52||37||56||163||…||1.4||1.7||4.7|
Annual average of net disbursements in percent of exports of goods and services is calculated only for selected years because of the lack of export data.
|Gross Disbursements||Net Disbursements|
|Annual average||Prov.||Annual average||Prov.|
|North Africa and the Middle East||13.8||13.7||12.5||10.2||11.1||5.7||1.6||1.0||2.8||4.2|
|East Asia and the Pacific||18.6||28.5||34.8||38.2||33.8||7.5||11.1||14.7||15.6||10.2|
|Europe and Central Asia||21.4||26.8||22.2||29.7||30.9||3.8||11.7||5.8||9.8||13.8|
|Private nonguaranteed debt1|
|North Africa and the Middle East||0.3||0.2||0.6||0.2||0.1||0.1||—||0.3||—||-0.2|
|East Asia and the Pacific||3.5||12.0||17.3||20.8||39.2||0.8||6.3||8.3||10.4||28.9|
|Europe and Central Asia||0.7||3.1||4.2||7.8||4.6||—||1.3||1.6||4.6||1.7|
Only 31 DRS reporting countries report their private nonguaranteed debt to the DRS; estimates are made by the World Bank for 29 other DRS reporting countries for which this type of debt is known to be significant.
|Shares in Total Multilateral Debt Outstanding|
|Regional development banks||IMF|
|Multilateral Debt||Total||World Bank||Other|
|(In millions of U.S. dollars)||(In percent of total multilateral debt outstanding)|
|Central African Rep.||163||679||76||96||—||—||39||65||3||1||22||22||12||8||24||4||2|
|Congo, Rep. of||342||726||38||58||17||12||19||24||15||13||1||17||45||28||3||5||3|
|Congo. Dem. Rep. of||1,410||2,747||41||70||3||3||26||47||4||10||1||7||8||17||57||16||7|
|Lao People’s Dem. Rep.||74||776||100||100||—||—||36||43||—||—||36||44||14||4||14||9||9|
|Sâo Tomé and Príncipe||22||200||100||100||—||—||—||30||—||—||38||58||62||11||—||—||—|
|Yemen, Rep. of||742||1,436||85||88||—||—||47||63||—||—||—||—||47||29||6||8||—|
|Total (in millions of U.S. dollars)2,3||25,922||70,237||12,697||53,492||5,510||6,286||6,688||32,511||977||5,683||1,936||9,268||4,121||8,403||6,690||8,087||5,996|
|Share of total debt (in percent)||100.0||100.0||49.0||76.2||21.3||8.9||25.8||46.3||3.8||8.1||7.5||13.2||15.9||12.0||25.8||11.5||8.5|
SAF, ESAF, and Trust Fund.
Data on Angola for 1996 are incomplete; total multilateral concessional debt is $169 million, while the aggregate figure reported to DRS is $155 million, which is used in other tables.
Data on Vietnam for 1985 are incomplete, including only debt to IDA and the IMF. Total for 1985 includes $152 million for Vietnam, while aggregate data presented in other tables exclude it.
|Country/Agreement||I||II||III||IV||V||VI||VII||VIII||IX||X||XI||Total1||Number of Agreements|
|Macedonia, former Yugoslav Rep. of||288||288||1|
|Yemen, Rep. of||113||113||1|
|Trinidad and Tobago||209||110||319||2|
|Congo, Rep. of||756||1,052||1,175||1,758||4,741||4|
|Central African Rep.||72||13||14||28||4||32||163||6|
|Congo, Dem. Rep. of||270||170||40||1040||500||1497||408||429||671||1,530||6,555||10|
Includes significant double counting in cases where previously rescheduled debt has been rescheduled; also includes tranches that may not have been implemented.
Limited terms of reference rescheduling of certain long-standing arrears.
Total value of debt restructured.
Stock-of-debt operation under Naples terms.
Former Socialist Federal Republic of Yugoslavia.
The Philippines’ 1994 rescheduling agreement was canceled at the authorities’ request.
Gabon’s 1991 rescheduling agreement was declared null and void.
(Falling during the consolidation period)
|Debt service due||522||35,677||36,199|
|Pre-cutoff date debt||455||23,869||24,324|
|Nut previously rescheduled||121||6,511||6,632|
|Of which: Deferrals||2||4736||4,738|
|Post-cutoff date debt||54||11487||11,541|
|Debt service treated||376||21,285||21,661|
|Not previously rescheduled||121||6,131||6,252|
|Of which: Deferrals||—||3,708||3,708|
|Post-cutoff date debt||—||—||—|
|Debt service payable||207||16,824||17,031|
|Not previously rescheduled||—||380||380|
|Of which: Deferrals||2||1,028||1,030|
|Post-cutoff date debt||54||11,487||11,541|
|Debt service payable in percent of debt service due||…||…||47|
Includes agreements with Gabon, Ghana, Jordan, Peru, and Russia. For Russia and Peru, only the flow impact of the reschedulings is shown. In addition, some $21.2 billion of debt due from Russia after the end of the consolidation period and $5.6 billion from Peru were restructured over a longer period of time.
Arrears at the beginning of the consolidation period.
Including deferrals of debt treated under the most recent rescheduling agreement.
(Falling during the consolidation period)
|Debt service due||4,582||4,677||9,259|
|Pre-cutoff date debt||4,316||3,757||8,073|
|Not previously rescheduled||908||795||1,703|
|Of which: Deferrals||390||284||675|
|Post-cutoff date debt||209||915||1,123|
|Debt service treated||4,296||3,390||7,686|
|Not previously rescheduled||908||787||1,695|
|Of which: Deferrals||390||66||456|
|Deferred for the first time||104||—||104|
|Post-cutoff date debt||104||—||104|
|Debt service payable||649||1,417||2,066|
|Not previously rescheduled||0||8||8|
|Of which: Deferrals||0||219||219|
|Post-cutoff date debt||104||915||1,019|
|Debt service payable in percent of debt service due||…||…||22|
Arrears at the beginning of the consolidation period.
Including deferrals of debt treated under the most recent rescheduling agreement.
Including late interest if not consolidated.
|Stocks Treated1||Stocks Not Treated||Total Stocks|
|Pre-cutoff date debt||2,090||319||2,409|
|Not previously rescheduled||235||—||235|
|Post-cutoff date debt||—||1,048||1,048|
Debt not previously rescheduled and debt previously rescheduled on nonconcessional terms received a 67 percent net present value (NPV) debt reduction, while debt relief on debt previously rescheduled on Toronto or London terms was topped up to 67 percent in NPV terms.
Guyana’s outstanding principal to Trinidad and Tobago ($536 million) was previously rescheduled nonconcession ally outside the Paris Club framework.
For Bolivia, including debts rescheduled under the (nonconcessional) long-maturities option.
|Debtor Countries1||Date of Agreement (M/D/Y)||Amount Consolidated2||Consolidation Period3||Terms4|
|(In millions of U.S. dollars)||(In months)||(In years)|
|Benin I||06/22/89||193||13||Toronto terms|
|Benin II||12/18/91||152||19||London terms|
|Benin III||06/21/93||25||29||London terms|
|Benin IV||10/25/96||209||Stock||Naples terms|
|Bolivia III||03/15/90||276||24||Toronto terms|
|Bolivia IV||01/24/92||65||29||London terms|
|Bolivia V||03/24/95||482||36||Naples terms|
|Bolivia VI||12/14/95||881||Stock||Naples terms|
|Burkina Faso I||03/15/91||71||15||Toronto terms|
|Burkina Faso II||05/07/93||56||33||London terms|
|Burkina Faso III||06/20/96||64||Stock||Naples terms|
|Cambodia I||01/26/95||249||30||Naples terms|
|Cameroon III||03/25/94||1,259||18||London terms|
|Cameroon IV||11/16/95||1,129||12||Naples terms6|
|Central African Republic I||06/12/81||72||12||4.0||8.5|
|Central African Republic II||07/08/83||13||12||5.0||9.5|
|Central African Republic III||11/22/85||14||18||4.8||9.3|
|Central African Republic IV||12/14/88||28||18||Toronto terms|
|Central African Republic V||06/15/90||4||12||Toronto terms|
|Central African Republic VI||04/12/94||32||12||London terms|
|Chad I||10/24/89||7||24||15||Toronto terms|
|Chad II||02/28/95||7||24||12||Naples terms|
|Chad III||06/14/96||7||12||32||Naples terms|
|Congo, Republic of I||07/18/86||756||20||3.7||9.1|
|Congo, Republic of II||09/13/90||1,052||21||5.8||14.3|
|Congo, Republic of III||06/30/94||1,175||11||8.1||14.6|
|Congo, Republic of IV||07/16/96||1,758||36||Naples terms|
|Congo, Democratic Republic of I||06/16/76||270||18||1.0||7.5|
|Congo, Democratic Republic of II||07/07/77||170||12||3.0||8.5|
|Congo, Democratic Republic of III||12/01/77||40||6||3.0||9.0|
|Congo, Democratic Republic of IV||12/11/79||1,040||18||3.5||9.0|
|Congo, Democratic Republic of V||07/09/81||500||12||4.0||9.5|
|Congo, Democratic Republic of VI||12/20/83||1,497||12||5.0||10.5|
|Congo, Democratic Republic of VII||09/18/85||408||15||4.9||9.4|
|Congo, Democratic Republic of VIII||05/15/86||429||12||4.0||9.5|
|Congo, Democratic Republic of IX||05/18/87||671||13||6.0||14.5|
|Congo, Democratic Republic of X||06/23/89||1,530||13||Toronto terms|
|Costa Rica I||01/11/83||136||18||3.8||8.3|
|Cosua Rica II||04/22/85||166||15||4.9||9.4|
|Costa Rica III||05/26/89||182||14||4.9||9.4|
|Costa Rica IV||07/16/91||139||9||5.0||9.5|
|Costa Rica V||06/22/93||58||—||2.0||6.5|
|Côte d’lvoire I||05/04/84||230||13||4.0||8.5|
|Côte d’lvoire II||06/25/85||213||12||4.0||8.5|
|Côte d’lvoire III||05/27/86||370||36||4.1||8.6|
|Côte d’lvoire IV||12/17/87||567||16||5.8||9.3|
|Côte d’lvoire V||12/18/89||934||16||7.8||13.3|
|Côte d’lvoire VI||11/20/91||806||12||8.0||14.5|
|Côte d’lvoire VII||03/22/94||1,849||37||London terms|
|Dominican Republic I||05/21/85||290||15||4.9||9.4|
|Dominican Republic II||11/22/91||850||18||7.8||14.3|
|El Salvador I||09/17/90||135||13||8.0||14.5|
|Equatorial Guinea I||07/22/85||38||18||4.5||9.0|
|Equatorial Guinea II||03/03/89||10||…||Toronto terms|
|Equatorial Guinea III||04/02/92||32||12||London lerms|
|Equatorial Guinea IV||12/15/94||51||21||London terms|
|Ethiopia I||12/16/92||441||35||London terms|
|Ethiopia II||01/24/97||184||34||Naples terms|
|Gambia, The I||09/19/86||17||12||5.0||9.5|
|Guinea II||04/12/89||123||12||Toronto terms|
|Guinea III||11/18/92||203||12||London terms|
|Guinea IV||01/25/95||156||12||Naples terms|
|Guinea V||02/26/97||123||36||Naples terms6|
|Guinea-Bissau II||10/26/89||21||15||Toronto terms|
|Guinea-Bissau III||02/23/95||195||36||Naples terms|
|Guyana II||09/12/90||123||35||Toronto terms|
|Guyana III||05/06/93||39||17||London terms|
|Guyana IV||05/23/96||793||Stock||Naples terms|
|Haiti I||05/30/95||117||13||Naples terms|
|Honduras II||10/26/92||180||11||London terms|
|Honduras III||03/01/96||112||13||Naples terms6|
|Macedonia, former Yugoslav Rep. of I||07/17/95||288||9||12||3.1||14.6||5|
|Madagascar VI||10/28/88||254||21||Toronto terms|
|Madagascar VII||07/10/90||139||13||Toronto terms|
|Madagascar VIII||03/26/97||1,247||35||Naples terms|
|Mali I||10/27/88||63||16||Toronto terms|
|Mali II||11/22/89||44||26||Toronto terms|
|Mali III||10/29/92||20||18||London terms|
|Mali IV||05/20/96||33||Stock||Naples terms|
|Mauritania IV||06/19/89||52||12||Toronto terms|
|Mauritania V||01/26/93||218||24||London terms|
|Mauritania VI||06/28/95||66||36||Naples terms|
|Mozambique III||06/14/90||719||30||Toronto terms|
|Mozambique IV||03/23/93||440||24||London terms|
|Mozambique V||11/21/96||664||32||Naples terms|
|Nicaragua I||12/17/91||722||15||London terms|
|Nicaragua II||03/22/95||783||27||Naples terms|
|Niger VI||12/16/88||48||12||Toronto terms|
|Niger VII||09/18/90||116||28||Toronto terms|
|Niger VIII||03/04/94||160||15||London terms|
|Niger IX||12/18/96||128||31||Naples terms|
|Senegal VII||01/23/89||143||14||Toronto terms|
|Senegal VIII||02/12/90||107||12||Toronto terms|
|Senegal IX||06/21/91||114||12||Toronto terms|
|Senegal X||03/03/94||237||15||London terms|
|Senegal XI||04/20/95||169||29||Naples terms|
|Sierra Leone I||09/15/77||39||24||1.5||8.5|
|Sierra Leone II||02/08/80||37||16||4.2||9.7|
|Sierra Leone III||02/08/84||25||12||5.0||10.0|
|Sierra Leone IV||11/19/86||86||18||4.8||9.2|
|Sierra Leone V||11/20/92||164||30||London terms|
|Sierra Leone VI||07/20/94||42||17||London terms|
|Sierra Leone VII||03/28/96||39||24||Naples terms|
|Tanzania II||12/13/88||377||6||Toronto terms|
|Tanzania III||03/16/90||199||12||Toronto terms|
|Tanzania IV||01/21/92||691||30||London terms|
|Tanzania V||01/21/97||1,608||36||Naples terms|
|Togo VII||06/20/89||76||14||Toronto terms|
|Togo VIII||07/09/90||88||24||Toronto terms|
|Togo IX||06/19/92||52||9||London terms|
|Togo X||02/23/95||237||33||Naples terms|
|Trinidad and Tobago I||01/25/89||209||14||4.9||9.4|
|Trinidad and Tobago II||04/27/90||110||13||5.0||9.5|
|Uganda IV||01/26/89||89||18||Toronto terms|
|Uganda V||06/17/92||39||24||London terms|
|Uganda VI||02/20/95||110||Stock||Naples terms|
|Vietnam I||12/14/93||791||—||London terms|
|Yemen. Republic of I||09/24/96||113||10||Naples terms|
|Zambia IV||07/12/90||963||18||Toronto terms|
|Zambia V||07/23/92||917||33||London terms|
|Zambia VI||02/28/96||566||36||Naples terms|
Roman numerals indicate, for each country, the number of debt reschedulings, in the period beginning 1976.
Includes debt service formally rescheduled as well as postponed maturities.
In a number of cases consolidation period was extended.
Terms for current maturities due on medium- and long-term debt covered by the rescheduling agreement and not rescheduled previously. Grace and maturity are calculated from the middle of the consolidation period plus six months.
Graduated payment schedule.
Naples terms with a 50 percent net present value reduction.
Date of informal meeting of creditors on the terms to be applied in the bilateral reschedulings.
Total value of debt restructured for Egypt in 1991 includes the cancellation of military debt by the United States.
The former Yugoslav Republic of Macedonia agreed to the terms of the rescheduling, but did not sign the Agreed Minute.
The 1994 rescheduling was canceled at the request of the authorities.
Total value of debt restructured for Poland in 1991.
Creditors met under the chairmanship of the Group of Participating Creditor Countries.
Former Socialist Federal Republic of Yugoslavia.
1997, Debt Relief for Low-Income Countries: The HIPC Initiative (Washington: International Monetary Fund).
1995, Official Financing for Developing Countries, World Economic and Financial Surveys (Washington: International Monetary Fund).
1997, Recent Export Credit Market Developments, IMF Working Paper 97/27 (Washington: International Monetary Fund).
International Monetary Fund, 1997a, News Brief No. 97/55, August4, 1997, “IMF Adopts Guidelines Regarding Governance Issues.”
International Monetary Fund, 1997b, World Economic Outlook, May 1997: A Survey by the Staff of the International Monetary Fund, World Economic and Financial Surveys (Washington).
International Working Group on External Debt Statistics, 1994, Debt Stocks, Debt Flows, and the Balance of Payments (Paris: Organization for Economic Cooperation and Development).
1995, Officially Supported Export Credits: Recent Developments and Prospects, World Economic and Financial Surveys (Washington: International Monetary Fund).
Organization for Economic Cooperation and Development, 1997a, News Release, June19, 1997, “Aid and Other Financial Flows in 1996.”
Organization for Economic Cooperation and Development, 1997b, Geographical Distribution of Financial Flows to Aid Recipients: Disbursements, Commitments, Country Indicators, 1991-95 (Paris).
Organization for Economic Cooperation and Development, Development Assistance Committee, 1996, Shaping the 21st Century: The Contribution of Development Cooperation (Washington).
Organization for Economic Cooperation and Development, 1997a, Conflict, Peace, and Development Co-operation on the Threshold of the 21st Century (Paris).
Organization for Economic Cooperation and Development, 1997b, Development Cooperation: Efforts and Policies of the Members of the Development Assistance Committee: 1996 Report (Paris).
Organization for Economic Cooperation and Development, 1997c, Final Report of the Ad Hoc Working Group on Participatory Development and Good Governance (Paris).
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While the exact figures differ among various sources because of incompatible coverage and definitions, the overall magnitudes are similar. See, for example, International Monetary Fund (1997b) and World Bank (1997). Overall flows include foreign direct investment, portfolio equity flows, and grants, in addition to the debt-creating flows shown in Section IV, Table 4. of this paper.
For a list of these countries, see Table A1; these do not include transition countries.
DAC data include only concessional flows from the IMF and thus exclude transactions from the IMF’s General Resources Account—the bulk of IMF lending. The World Bank Debtor Reporting System figures used in Section IV include all operations of the IMF.
The members of the DAC are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, the United States, and the Commission of the European Communities.
The IMF has also recently adopted guidelines regarding governance issues (International Monetary Fund, 1997a).
This section updates the information provided in earlier papers on the basis of data from the International Union of Credit and Investment Insurers (the Berne Union), the OECD, and individual export credit agencies. For a detailed description of the role of export credit agencies in financing developing countries and economies in transition, and of the basic features of official support for export credits, see Kuhn, Horvath, and Jarvis (1995). Also, see Drummond (1997).
While the trends reported here are clear, specific figures need to be interpreted with caution. The problems that arise in discussions of export credit statistics are discussed in Kuhn, Horvath, and Jarvis (1995, Appendix II). Starting in 1994, the figures supplied by the Berne Union include data for some smaller export credit agencies, and cover 20 additional debtor countries. The effect of this expansion on total exposure was reflected in 1994 and on new commitments in 1995.
This includes undisbursed credit; see the glossary in Appendix II.
Based on 1994 country coverage.
Accounting practices of agencies differ, and only net cash-flow data-not accrual data-are available on a consistent basis from all export credit agencies. Assessing the financial position of export credit agencies on an accrual basis requires, among other steps, estimating the expected recovery of claims and provisioning for possible eventual losses. An increasing number of agencies have been moving toward more sophisticated accounting systems, but interagency comparisons remain extremely difficult given agencies-different accounting practices.
As discussed above, the accounting treatment of arrears and restructured debts differs among agencies. In particular, agencies that restructure an insured claim by refinancing will not reflect this in new commitments and in the cash flow of the agency, whereas this would be reflected for agencies that reschedule an insured claim involving a cash payment by the agency to the claimant. For this reason, among others, the Berne Union data and cash-flow balances reported by the agencies should be interpreted with caution.
The last comprehensive change to the Consensus took place in August 1994, when participants agreed to a package of measures—the “Schaerer Package”—designed to tighten and simplify the implementation of the earlier agreement. A detailed description of the operation of the Organization for Economic Cooperation and Development Consensus is contained in Kuhn, Horvath, and Jarvis (1995, Appendix III). The package agreed upon in 1994 contained a number of measures, including restrictions on the “grandfathering” of credits already in the pipeline when changes are made, the abolition of the subsidized SDR interest rate on export credits, and a tightening of the definition of concessionality in the calculation or tied-aid credits.
Investment insurance cover is not subject to the Consensus.
There are three broad categories of investment insurance risk that are usually covered by bilateral and multilateral agencies: currency (in)convertibility and transfer, nationalization and expropriation (without compensation), and war and civil disturbance.
In line with the definition used in the World Bank Debtor Reporting System (DRS), multilateral lending in this section refers to lending by international organizations, including the World Bank, regional development banks, and other multilateral and intergovernmental agencies (also see Box 3). Lending by the IMF is also included. Lending by funds administered by an international organization on behalf of a single donor government is excluded. The statistical information used in this section is derived mostly from the DRS supplemented by IMF staff estimates. The data for 1996 are provisional estimates.
A group of 136 countries reporting to the DRS. There have been two changes in the composition of this group: the Republic of Korea has been reclassified as a high-income country and is thus excluded from the group, and Bosnia and Herzegovina was included in the group for the first time. The data are not consistent with those derived from the Development Assistance Committee (DAC) sources used in Section II.
Mexico drew SDR 8.8 billion (equivalent to $13.3 billion). In addition, there were a number of large IMF loans in 1995, including to Russia (SDR 3.6 billion), Zambia (SDR 1.8 billion), Argentina (SDR 1.6 billion), and Ukraine (SDR 0.8 billion), resulting in total IMF lending of SDR 18.4 billion in 1995 compared with SDR 6.0 billion in 1996.
Middle-income countries have also received an increasing share of disbursements of private nonguaranteed debt in recent years.
Debt service was exceptionally high in 1995, reflecting the clearance of Zambia’s arrears to the IMF.
These guarantees are designed to catalyze financing from private lenders. For this reason, only “partial” guarantees are usually offered, with risks shared by a guarantor and private lenders.
See Boote and others (1995) for a detailed description of earlier developments. Appendix II of this paper contains a glossary of technical terms. Since 1976, the Paris Club has concluded 267 agreements with 67 rescheduling countries, involving the reorganization of some $333 billion (see Tables A6 and A10).
In the context of the Paris Club, the terms “middle-income” and “low-income” refer to countries that have obtained nonconcessional or concessional rescheduling terms.
A low-income country based on the World Bank’s GNP per capita classification. Ghana’s authorities requested a limited nonconcessional deferral of certain long-standing arrears only.
This applies to the conversion on a voluntary and bilateral basis in the framework of debt-for-nature, debt-for-aid, debt-for-equity, or other local-currency-debt swaps, and raises the limit on such transactions to the greater of 20 percent of consolidated commercial credits outstanding or SDR 15–30 million (the exact figure within this range is decided on a case-by-case basis) per creditor. There are no limits on debt swaps of ODA loans.
The rescheduling agreements with five countries had an entry-into-force clause: Chad, Republic of Congo, Gabon, Tanzania, and Zambia. This usually linked en try-in to-force of the rescheduling agreement to the receipt by creditors of specified payments or, in one country, to the implementation of an IMF-supported program.
According to creditor information.
The rescheduling for Gabon covered all pre-cutoff date debt except for that rescheduled in 1994. It entered into force at end-1995 after the receipt of certain payments.
Net debt relief is defined as consolidated current maturities minus payments due during the consolidation period (moratorium interest).
Naples terms are described in detail in Boote and others (1995).
Countries with a per capita income of more than $500 and a ratio of debt to exports in present value terms of less than 350 percent receive a 50 percent NPV reduction decided on a case-by-case basis.
In Honduras, interest falling due and interest arrears arising from previously rescheduled debt were not consolidated. In the Republic of Yemen, late interest arrears were not consolidated.
As a result of the zero-option agreement between these countries and Russia, the latter look over the external debt of the former Soviet Union. For a description of this agreement, see Boote and others (1995, Appendix III).
For a more detailed description of the HIPC Initiative, see Boote and Thugge (1997).
For this calculation, the claims of bilateral creditors would be measured after the full application of traditional forms of debt relief, that is, Naples terms from Paris Club creditors involving a 67 percent NPV reduction on eligible debt and at least comparable action by other bilateral and commercial creditors.
Note: For a more expanded glossary, see International Working Group on External Debt Statistics (1994).