- International Monetary Fund
- Published Date:
- March 2004
Net official development finance (ODF) fell from an average of
|(Billions of U.S. dollars)|
|Net official development finance (ODF)2||84.5||87.6||73.5||75.4||89.0||85.9||65.5||68.3||…|
|Net official development assistance (ODA)2||59.6||59.1||55.8||47.9||50.3||52.1||49.5||52.3||57.0|
|Other official flows (ODF)3||24.9||28.5||17.7||27.6||38.7||33.8||16.0||17.7||…|
|(Percent of total OOF)|
|(Billions of U.S. dollars)|
|Net ODF (at constant 2000 prices and exchange rates)||89.6||101.6||82.9||79.1||91.4||89.8||65.5||658||…|
|Total net resource flows5||225.9||264.2||350.7||321.6||230.7||312.0||212.9||190.7||…|
|Net ODF as a share of total net flows (percent)||37.4||33.1||21.0||23.5||38.6||27.5||30.8||35.8||…|
|ODA share of respective ODF (percent)|
There is a series break in 1997 due to the reclassification of some ODA recipients (Part I countries) to official aid recipients (Part II countries). See Table A1.2.
See note to Figure A1.1 and the Glossary for definitions of ODA and ODF.
Other official flows (OOF) include official aid.
Includes only concessional flows from the IMF.
Includes ODF, export credits, foreign direct investments, international bank and bond lending, grants by nongovernmental organizations, and other private flows.
|Part I: Developing Countries/Areas and Territories|
(Recipients of official development assistance)
|Part II: Countries/Areas and Territories in Transition (Recipients of official aid)|
|Least developed countries||Other low-income countries (Per capita GNI <$745 in 2001)||Lower-middle-income countries (Per capita GNI $746–2,975 in 2001)||Upper-middle-income countries (Per capita GNI $2,976–9,205 in 2001)||High-income countries (Per capita GNI >$9,206 in 2001)||Central and Eastern European countries and newly independent states of the former Soviet Union||More advanced developing countries/areas and territories|
|Afghanistan, I.S. of||*Armenia||*Albania||Palestinian Administered||Botswana||Bahrain||*Belarus||•Aruba|
|Benin||Congo, Rep. of||Bolivia||Peru||Cook Islands||*Estonia||Brunei|
|Bhutan||Côte d’Ivoire||Bosnia and Herzegovina||Philippines||Costa Rica||*Hungary||•Cayman Islands|
|Burkina Faso||*Georgia||China||South Africa||Croatia||*Latvia||Taiwan Province of China|
|Cambodia||India||Cuba||St. Vincent and the||Gabon||*Poland||•Falkland Islands|
|Cape Verde||Indonesia||Dominican Rep.||Grenadines||Grenada||*Romania||•French Polynesia|
|Central African Rep.||Kenya||Ecuador||Suriname||Lebanon||*Russia||•Gibraltar|
|Chad||Korea, Dem. People’s||Egypt||Swaziland||Malaysia||*Slovak Rep.||•Hong Kong SAR|
|Comoros||Rep. of||El Salvador||Syrian Arab Rep.||Mauritius||*Ukraine||Israel|
|Congo, Dem. Rep. of||*Kyrgyz Rep.||Fiji||Thailand||•Mayotte||Korea, Rep. of|
|Ethiopia||Nigeria||Iran, I.R. of||Turkey||St. Lucia||Malta|
|Gambia, The||Pakistan||Iraq||*Turkmenistan||Venezuela, Rep.||•Netherlands Antilles|
|Ghana||Papua New Guinea||Jamaica||•Wallis and Futuna||Bolivariana de||•New Caledonia|
|Guinea-Bissau||*Tajikistan||Jordan||Yugoslavia, Fed. Rep. of||Qatar|
|Lao P.D.R.||Vietnam||Marshall Islands||Threshold for||United Arab Emirates|
|Lesotho||Zimbabwe||Micronesia, Fed. States of||World Bank||•Virgin Islands (U.K.)|
|Madagascar||Namibia||($5,185 in 2001)|
|Mali||Antigua and Barbuda|
|Sao Tome and Principe||Saudi Arabia|
|Sierra Leone||St. Kitts and Nevis|
|Solomon Islands||Trinidad and Tobago|
|Somalia||•Turks and Caicos|
|Yemen, Rep. of|
Central and Eastern European countries and newly independent states of the former Soviet Union.
Figure A1.1.Direction of Net Official Flows, 20011
Source: OECD database.
1Official development assistance (ODA) represents flows of official financing with the main objective of promoting economic development and with a grant element of at least 25 percent (based on a 10 percent discount rate). Other official flows (OOF) represent official development finance (ODF) that does not meet the ODA criteria; includes officially supported export credits.
2Multilateral disbursements (including from the IMF) differ from DAC countries’ contribution to multilateral institutions.
3Includes countries in the Middle East.
4Includes economies in transition and more advanced developing countries, as defined by the DAC.
Net official development assistance (ODA), the major component of net ODF, fell slightly from
|(Billions of U.S. dollars)|
|Total net ODA2||65.0||65.3||62.2||54.9||58.3||62.4||59.8||59.5||…|
|Contributions to multilateral institutions3||18.5||19.2||17.0||16.5||17.2||19.1||18.5||18.0||…|
|Total net ODA from DAC countries|
|(at 2000 prices and exchange rates)||563||50.9||49.5||45.7||49.0||49.9||49.5||52.5||…|
|Contributions to multilateral institutions||17.3||15.9||14.8||14.7||14.7||13.6||13.4||16.2||…|
|Distribution4||(Percent of total)|
|Net ODA by income group|
|Least developed countries||27.7||28.8||24.9||26.8||24.9||23.4||24.7||25.9||…|
|Net ODA by region|
|North Africa and Middle East||15.1||11.1||15.1||12.7||11.9||11.3||10.7||10.5||…|
|(Billions of U.S. dollars)|
|Total gross ODA||71.0||72.2||69.4||61.5||64.5||68.9||65.6||65.3||…|
|Gross bilateral ODA||52.5||53.2||52.8||45.2||47.3||49.9||47.1||47.2||…|
|Total net ODA to developing countries7||606||59.8||56.6||48.9||31.2||52.9||50.5||51.6||…|
|Development Assistance Committee countries||41.3||40.6||39.1||32.4||35.2||37.9||36.0||35.0||…|
|Multilateral institutions of DAC countries||18.3||18.4||16.7||15.4||15.1||14.2||13.4||15.6||…|
|Total net ODA to developing countries as percent of recipient GNI (in percent)||1.2||1.1||0.9||0.8||0.9||1.0||0.9||1.0||…|
|Total net ODA to HIPCs||18.8||18.9||16.8||14.6||14.7||14.5||14.4||15.5||…|
|Total flows within developing countries (net ODA)9||1.0||0.8||0.9||1.0||0.9||08||1.0||1.0||…|
There is a series break in 1997 due to the reclassification of some ODA recipients (Part I countries) to official aid recipients (Part II countries). See Table A1.2.
Including official aid.
Includes contributions to the IMF Trust Fund, Interest Subsidy Account, SAF, ESAF/PRGF, and Administered Accounts.
Distribution of total net ODA from DAC and other sources, including unspecified.
Central and Eastern European countries and newly independent states of the former Soviet Union, as well as other more advanced developing countries that are in Part II of the DAC’s list of aid recipients.
Includes contributions to regional or multinational projects and programs.
Includes countries in transition that are in Part II of the OECD’s DAC list of aid recipients.
Oceania and unspecified.
Includes flows from countries in the Middle East and other developing country or area donors (including China, India, Korea, and Taiwan Province of China).
|At Current Prices||At Constant 2001 Prices||At current prices||At constant 2001 prices4||Share of Donor’s GNI 2002|
|(Billions of U.S. dollars)|
|Other DAC donors5||12.0||12.9||14.1||11.9||13.0||14.3||14.5||12.7||11.8||9.3||9.3||14.1||15.3||14.0||8.2||–0.7||0.46|
|(In percent of GNI)||0.33||0.33||0.33||030||0.30||0.27||0.25||0.22||0.23||0.24||0.22||0.22||0.23|
Not strictly comparable to earlier data due to the reclassification of some former ODA recipients to Part II of the DAC’s list of aid recipients. See Table A1.2.
Figures for 2002 are provisional.
At 2001 prices and exchange rates.
Excludes debt forgiveness of non-ODA claims.
Includes Australia, Austria, Belgium, Finland, Ireland, Luxembourg, New Zealand, Norway, Portugal, Spain, and Switzerland.
The share of ODA in donors’ gross national income fell between 2000 and 2001 to an average of 0.22 percent, one of the lowest levels since 1990. Only Denmark, Luxembourg, the Netherlands, Norway, and Sweden provided ODA above the United Nations recommended level of 0.7 percent of national income in 2000. For the G-7 countries, this ratio was below 0.2 percent on average, although these countries provided the bulk of the net ODA disbursements in U.S. dollar terms (Figures A1.2 and A1.3). In 2000, Japan was the largest provider of ODA (
Figure A1.2.Net ODA Disbursements by Total DAC and G-7 Countries
1Not strictly comparable to earlier data due to the reclassification of some former ODA recipients to official aid recipients (Part II of the DAC’s list of aid recipients). See Table A1.2.
2Data for 2002 are preliminary and may change.
The composition and distribution of ODA has remained largely unchanged compared with past years, with a few exceptions (Table A1.5). Around two-thirds of ODA continues to take the form of direct bilateral financing to recipients, with the remaining one-third consisting of contributions to multilateral institutions. Almost all bilateral ODA is offered to recipients in the form of grants, with assistance for the purposes of social, administrative, and economic infrastructure making up around half of total allocations in 2000–01.
|(Billions of U.S. dollars)|
|Total net ODA||65.0||65.3||62.2||54.9||58.3||62.4||59.8||595|
|Contributions to multilateral institutions1||18.5||19.2||17.0||16.5||172||19.1||18.5||18.0|
|Composition of bilateral net ODA|
|By type of assistance|
|Emergency relief||4.2||3 7||3.5||3.0||33||5.1||4.1||3.8|
|By purpose of aid2|
|Social and administrative infrastructure||27.8||31.2||29.8||30.7||31.3||31.2||31.9||33.2|
|Health and population||3.7||4.1||4.7||4.2||4.3||4.6||4.0||4.6|
|By tying status4|
Includes contributions to the IMF Trust Fund, Interest Subsidy Account, SAF, ESAF/PRGF, and Administered Accounts.
Including forgiveness of non-ODA debt.
Based on commitments.
Based on commitments of bilateral ODA (excludes technical cooperation and adminstrative costs).
In terms of regional distribution, the main recipients of ODA continued to be Asia (37 percent of total ODA) and sub-Saharan Africa (31 percent), although both regions are now receiving somewhat lower shares of total ODA compared with their average for the mid-1990s (see Table A1.3). Across income groups, low-income countries’ share in total ODA has increased since 1999, as HIPCs attracted a larger portion of the ODA flows. At the same time, the share of middle-income and transition economies in total ODA net disbursements fell from 43 percent in 1999 to about 40 percent in 2001.
Around 17 percent of ODA provided in 2000 represented tied aid, a reversal of a declining trend over the three preceding years. The share of tied aid in total ODA continued to increase in 2001, to about 18 percent. Partially tied aid, although a small part of ODA, also increased slightly between 2000 and 2001.
The prospects for aid flows to developing countries in the coming years will depend importantly on the implementation and the support by DAC countries of two recent international initiatives. The first relates the adoption by low-income countries of Poverty Reduction Strategy Papers (PRSPs) as the tool for devising key national policies aimed at reducing poverty and promoting growth. The second concerns the commitment to help low-income countries achieve the MDGs.
PRSPs are expected to serve as the operational framework through which a country identifies specific priorities, which often require donor resources. By allowing for the involvement of a wide range of stakeholders, PRSPs are also expected to contribute to better implementation and monitoring of aid programs, and they have become the basis for the provision of concessional assistance by the IMF and World Bank. OECD countries have adopted guidelines on poverty reduction and policy coherence that support the PRSP approach.31 There are indications that these developments have already had an impact on the allocation of aid, as evidenced in the higher share of ODA to least developed countries and for social expenditures in 2000–01 (see Tables A1.3 and A1.5, respectively).
As more countries begin implementing their poverty-reduction strategies, donors should be in a position to increase their financing to those countries with credible strategies that reflect wide civil society participation, display country ownership, and identify more explicitly the country’s financing needs.32 The form of ODA may also be affected, with further possible declines in nongrant ODA and reductions in tied aid.33 At the same time, to the extent that donors allocate ODA to those countries with the strongest policy efforts to reduce poverty and increase growth, country allocations can also be expected to shift over time. While it is at present too early to ascertain possible effects on ODA flows, outcomes described above are likely, provided that major donor countries adhere to the current international consensus on aid policy.
The MDGs have become the international community’s main targets in the fight against poverty.34 The MDGs were reaffirmed at the Millennium Summit in September 2000 and there is now a growing impetus to utilize them as targets for assessing progress in reducing poverty. Most recently, at the March 2002 Monterrey conference, donor countries confirmed their commitment to helping developing countries achieve the MDGs and other international targets.
Satisfactory progress toward the MDGs implies substantial net increases in ODA to developing countries, according to several recent studies. Estimates by the World Bank and the UN suggest that extra ODA on the order of
Reflecting in part efforts to make progress toward the MDGs, several bilateral donors have announced their intentions to increase ODA in the years ahead. For example, EU members have committed to raise their collective ODA to 0.39 percent of GNI by 2006, with all members aiming to attain a level of at least 0.33 percent by that time. Some countries such as the Netherlands and Norway, which target a given ODA/GNI ratio, will continue to provide real increases that match their rates of economic growth. The United States has announced plans for a
The HIPC Initiative was launched by the IMF and the World Bank in 1996 as the first comprehensive effort to reduce unsustainable debt in the world’s poorest, most heavily indebted countries.38 It was enhanced in the fall of 1999, and aims at reducing the net present value (NPV) of debt at the decision point to a maximum of 150 percent of exports, or for very open economies, to 250 percent of central government revenue.
To demonstrate their capacity to pursue sound economic policies with a focus on poverty reduction, eligible countries are required to establish a satisfactory track record under their IMF- and IDA-supported economic reform and poverty reduction programs. Once a satisfactory track record has been established, a debt sustainability analysis (DSA) is carried out jointly by the HIPC authorities, the IMF, and the World Bank. The country qualifies for HIPC relief if its ratio of the NPV of debt to exports or revenue is greater than the HIPC threshold as defined above. Based on the results of DSA, the Executive Boards of the IMF and the Bank formally decide on the country’s qualification for debt relief—that is, the decision point is reached. Debt relief and other assistance begin flowing as soon as the decision point is reached, with the amount based on the country’s immediate needs and capacity for channeling the funds to poverty-reducing purposes. At the completion point, when specific measures needed to strengthen poverty reduction efforts and macroeconomic management have been implemented, creditors provide the remainder of the committed debt relief on the basis of their overall exposure.
Thirty-eight countries are expected to qualify for assistance under the enhanced HIPC Initiative, most of which are in sub-Saharan Africa. As of end-November 2003, 27 countries had reached their decision points under the enhanced framework (Benin, Bolivia, Burkina Faso, Cameroon, Chad, the Democratic Republic of the Congo, Ethiopia, The Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Sao Tomé and Príncipe, Senegal, Sierra Leone, Tanzania, Uganda, and Zambia). Of these countries, eight (Benin, Bolivia, Burkina Faso, Mali, Mauritania, Mozambique, Tanzania, and Uganda) had reached their completion points, at which time the debt relief became irrevocable, with total committed assistance estimated at some
|Target NPV of Debt-to-||Assistance Levels1|
(Millions of U.S. dollars, present value)
|Percentage Reduction in NPV of Debt2||Estimated Total Nominal Debt Service Relief (Millions of U.S. dollars)|
|Decision Point||Completion Point||Exports||Government revenue|
|Completion point reached under enhanced framework|
|Benin||Jul. 2000||Mar. 2003||150||265||77||189||24||84||31||460|
|Original framework||Sep. 1997||Sep. 1998||225||448||157||291||29||54||14||760|
|Enhanced framework||Feb. 2000||Jun. 2001||150||854||268||585||55||140||30||1,300|
|Original framework||Sep. 1997||Jul. 2000||205||229||32||196||22||91||27||400|
|Enhanced framework||Jul. 2000||Apr. 2002||150||195||35||161||22||79||30||300|
|Original framework||Sep. 1998||Sep. 2000||200||121||37||84||14||43||9||220|
|Enhanced framework||Sep. 2000||Mar. 2003||150||417||132||285||45||143||29||675|
|Mauritania||Feb. 2000||Jun. 2002||137||250||622||261||361||47||100||50||1,100|
|Original framework||Apr. 1998||Jun. 1999||200||1,717||1,076||641||125||381||63||3,700|
|Enhanced framework||Apr. 2000||Sep. 2001||150||306||194||112||18||62||27||600|
|Tanzania||Apr. 2000||Nov. 2001||150||2,026||1,006||1,020||120||695||54||3,000|
|Original framework||Apr. 1997||Apr. 1998||202||347||73||274||69||160||20||650|
|Enhanced framework||Feb. 2000||May 2000||150||656||110||546||91||357||37||1,300|
|Decision point reached under enhanced framework|
|Congo, Democratic Rep. of||Jul. 2003||Floating||150||6,311||3,837||2,474||472||831||80||10,389|
|Gambia, The||Dec. 2000||Floating||150||67||17||49||2||22||27||90|
|Original framework||Dec. 1997||May 1999||107||280||256||91||165||35||27||24||440|
|Enhanced framework||Nov. 2000||Floating||150||250||329||129||200||40||41||40||590|
|São Tomé and Principe||Dec. 2000||Floating||150||97||29||68||—||24||83||200|
|Sierra Leone||Mar. 2002||Floating||150||600||205||354||123||122||80||950|
|Preliminary HIPC document issued|
|Côte d’Ivoire||Mar. 19983||…||141||280||345||163||182||23||91||64||800|
|Total assistance provided/committed||31,428||15,456||15,801||2,5165||7,228||51,934|
|Preliminary HIPC document issued|
Assistance levels are at countries’ respective decision or completion points, as applicable.
In percent of the net present value of debt at the decision or completion point (as applicable), after the full use of traditional debt-relief mechanisms.
Côte d’Ivoire reached its decision point under the original framework in March 1998. The total amount of assistance committed thereunder was $345 million in NPV terms.
Nonreschedulable debt to non-Paris Club official bilateral creditors and the London Club, which was already subject to a highly concessional restructuring, is excluded from the NPV of debt at the completion point in the calculation of this ratio.
Equivalent to SDR 1,727 million at an SDR/U.S. dollar exchange rate of 0.6862, as of December 3, 2003.
It is suggested that enhanced HIPC relief for Côte d’Ivoire overtake the commitments made under the original HIPC framework.
In combination with traditional debt relief and pledges of additional bilateral debt forgiveness, the external indebtedness of the 27 countries that reached their decision points will be reduced by almost two-thirds in NPV terms (from
This reflected in part the resumption of IMF and IDA support to several countries during this period, as well as delivery of debt relief.
Debt-service payments by the 27 countries that have either reached their completion points or are in their interim periods averaged
Debt relief under the HIPC Initiative in part enables recipient countries to increase social expenditures. Spending on health and education in the 27 HIPCs is estimated to have risen by over 30 percent (
Based on the most recent available information, the total cost of assistance under the HIPC Initiative to 34 countries40 is estimated at
As a result of the deterioration in exports following the recent global downturn, the NPV of debt-to-export ratios at the completion point may be higher than the projections at the decision point for some 8–10 HIPCs. In total, the debt of these countries (in NPV terms), after taking into account additional debt forgiveness already announced by a number of bilateral creditors, may exceed the HIPC thresholds at the completion point by some
Multilateral creditors account for
Paris Club creditors are estimated to account for 38.6 percent (
Non-Paris Club official bilateral creditors are required to deliver 8.6 percent of the total cost of relief (
Commercial creditors’ claims on the 27 decision point HIPCs amount to approximately
Increasing the participation of creditors, especially non-Paris Club official bilateral and commercial creditors, remains a challenge for the successful implementation of the HIPC Initiative, especially for creditors with which the World Bank and the IMF have infrequent or little communication. The international community is limited in its ability to secure creditor participation because the Bank’s and the IMF’s decisions on the HIPC Initiative are not binding on creditors and the Paris Club’s Agreed Minutes create no obligations on the part of non-Paris Club creditors. The noncooperation of these creditors would have adverse implications for the debt sustainability of HIPCs. It is thus important that HIPCs engage actively in a constructive dialogue with their non-Paris Club official bilateral and commercial creditors and seek debt relief within the framework of the enhanced HIPC Initiative.
The assessment of fiscal and external sustainability is a key element in the IMF’s work on member countries. The IMF’s advice on macroeconomic policies and decisions on access to Fund resources depend crucially on judgments about debt sustainability. This is particularly so in the case of emerging market economies that are highly integrated into global capital markets.
With a view to strengthening the IMF’s role in crisis prevention, the Executive Board adopted in June 2002 a strengthened framework for assessing debt sustainability in emerging market economies.41 The methodology will be applied on a progressive basis, principally for requests for use of IMF resources and in the context of IMF surveillance of members with significant market access.
The assessment of debt sustainability implies the need to project the evolution of the stocks of liabilities over time. A number of factors, which are multidimensional and interconnected, influence such projections, including exchange rate dynamics, macroeconomic and financial developments, the external environment, and the linkages between governments, households, financial institutions, and corporations. These key factors inform various assessments of sustainability—external sustainability, fiscal sustainability, and financial sector stability. The relative importance of different factors, and the type of assessment that they inform, depends to a large extent on the individual country’s characteristics.
The analysis of external sustainability involves judgments about the availability of financing for the current account through private and official capital inflows, projections of the medium-term balance of payments and the associated debt dynamic, and assessments about the appropriate exchange rate policy and level.
The assessment of fiscal sustainability—with the aim of determining whether the existing fiscal stance is consistent with a stable debt-to-GDP ratio—focuses on indicators of public debt and deficits and medium-term fiscal projections. Generally speaking, the fiscal analysis should include all public institutions with the ability to contract debt. This is particularly important in countries where public entities have access to capital markets without explicit government guarantees. In addition, government contingent liabilities should be identified and a separate assessment made of the likelihood that they will be called.
Financial sector stability analysis has taken a more prominent place in the IMF’s macroeconomic framework after the experience of the past decade. The cornerstone of this focus is the Financial Sector Assessment Programs (FSAPs) undertaken jointly by the IMF and the World Bank. FSAPs seek to understand the vulnerabilities and development challenges facing the financial system with the ultimate objective of reducing the likelihood and severity of financial crises.
There are key interactions between the stability of the financial system and the sustainability of the public and external debt. On the one hand, the government is seen as the ultimate guarantor (explicit or implicit) of the financial system and is, therefore, confronted with potentially large contingent liabilities in the face of widespread bank insolvencies. On the other hand, since government securities constitute a large portion of financial institutions’ assets, an unsustainable stock of government debt could cause broader financial instability.
The framework for assessing debt sustainability attempts to integrate external, fiscal, and financial sector elements, in a systematic fashion. The analysis is built upon the medium-term projections that provide the basis for IMF programs. In addition, this framework incorporates a set of sensitivity tests that help examine the debt implications of alternative assumptions regarding policy variables, macroeconomic developments, and costs of financing. The assessments are expected to be especially useful for countries on the brink or in the midst of a crisis, and countries in the aftermath of a default. However, they are also expected to help identify how a country may become subject to insolvency issues even if it is not facing an imminent crisis, and examine the debt dynamics in program projections.
Assessments of sustainability are probabilistic by nature, since one can normally envisage some states of the world under which a country’s debt would be sustainable and others in which it would not. The analytical framework does not supply these probabilities but traces the implications of alternative scenarios. In practice, the analysis of different scenarios requires the determination of certain thresholds at which key variables would signal the danger of debt becoming unsustainable.42 Further research will be needed to identify such empirical thresholds for particular groups of countries. Naturally, any numeric exercise needs to be undertaken in the context of other variables, such as the structure of debt, interest rates spreads, shape of yield curves, and access to new borrowing, among other factors.
Under this framework, the external sustainability assessment is based on historical data and up to 10 years of projections of the current account balance and of non-debt-creating inflows (FDI, portfolio investment, and transfers). Similarly, the fiscal sustainability analysis focuses on the expected behavior of the primary deficit and non-debt-creating flows (grants and privatization receipts). Data on deflators, interest rates (external and domestic), and exchange rates are also at the center of the analysis. Financial sector stability is taken into account implicitly in the projections underlying the external and fiscal assessments.
Two kinds of sensitivity tests are undertaken. The first shows the ambitiousness of the baseline scenario relative to historical experience, by projecting the debt-to-GDP ratio using past averages for interest rates, deflators, current account (or primary balance in the fiscal case), and noninterest flows, and comparing the outcome to that under the baseline scenario. The other sensitivity tests consider adverse two-standard deviation shocks lasting two years to each of the key parameters in turn, and a one-standard deviation combined shock. Ideally, standard deviations used in the exercise should be estimated from historical data of the previous 10 years or more. In the absence of sufficient information, cross-country parameters may need to be used as an alternative. Finally, an additional scenario of a 30 percent real exchange rate depreciation is considered as well.
The evaluation of the sensitivity tests highlights some tricky empirical issues that call for added judgment: (1) sufficiently large shocks will cause almost any country’s debt dynamics to appear unsustainable; (2) some shocks may be correlated; and (3) historical data may be limited, or the relevant horizon for calculating means and standard deviations may be unclear if a country is undertaking important structural changes. In some cases, calibration of shocks may be necessary, especially if the implied shocks are large. The subsequent analysis of the stress test results must, therefore, be based on relevant factors and key variables in each individual case, as no single indicator or test can fully inform debt sustainability.
Agreed Minute. Paris Club document detailing the terms of 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 (in the case of a flow rescheduling), the proportion of payments to be rescheduled, the provisions regarding any downpayment, and the repayment schedules for rescheduled and deferred debt. Representatives in the Paris Club commit to recommending these terms to their governments for 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 PRGF arrangement, or a Rights Accumulation Program (RAP).
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.
BIS. Bank for International Settlements. Established in 1930, BIS is an international organization that fosters international monetary and financial cooperation and serves as a bank for central banks.
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 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 Paris Club 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 official 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 around six months after conclusion of the Agreed Minute, but it can be extended upon request.
Brady Plan. Approach adopted in the late 1980s to restructure debt to commercial banks that emphasizes voluntary market-based debt- and debt-service reduction (DDSR) operations. The main feature of the DDSR 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 added to 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.
Buyers’ 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.
CAF. Corporación Andina de Fomento. The CAF is a multilateral financial institution whose mission is to promote the sustainable development of its shareholder countries and regional integration. It serves the public and private sectors, providing multiple financial services to a broad customer base composed of the governments of shareholder countries, public and private companies, and financial institutions. Its policies incorporate social and environmental variables, and it includes efficiency and sustainability criteria in all its operations.
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 debt. Rescheduling agreements sometimes 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 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. This option is chosen by creditors 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, or other official institutions in association with other agencies or banks, or the World Bank and other multilateral financial institutions.
Cologne terms. See concessional rescheduling.
Commercial credit. In the context of the Paris Club, loans originally extended on terms that do not qualify as ODA 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 based on the secondary market yield on government bonds.
Commercial risk. In the context of export credits, the risk of nonpayment by a nonsovereign or private sector buyer or borrower in his home currency arising from default, insolvency, and/or 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 broader political risk).
Commitment. In the context of export credits, a contractual obligation by an export credit agency to lend, guarantee, or insure resources under specified financial terms and conditions and for specified purposes for the benefit of an importer. 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, reported 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 per annum) 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 set of structural adjustment and poverty reduction measures in the context of IMF- and World Bank-supported programs after reaching the decision point (see decision point) and the debt relief committed by the international community becomes irrevocable.
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 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 up to 80 percent (Lyon terms). In November 1999, the concessionality of such debt relief operations was increased to 90 percent debt reduction in NPV terms (Cologne 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 Table A5.1 and Figure A5.1.
Consensus. See OECD Consensus.
Consolidation period. In Paris Club rescheduling agreements, the period in which debt-service payments to be rescheduled (the “current maturities consolidated”) 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, on the basis of which the rescheduling takes place, expires.
Cover. Provision of export credit guarantee/insurance against risks of payments delays or nonpayments relating to export transactions. Cover is usually, though not always, provided both for commercial risk and for political risk. In most cases, cover is not provided for the full value of future debt-service payments; the percentage of cover typically is 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 (though 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 included in each Agreed Minute, typically ranging from zero 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 agreements 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 the 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. 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.
Debt-for-debt swap. Such swaps involve a change of creditor without otherwise changing the terms of repayment of their respective loans. They may involve external or domestic creditors.
Debt-for-development swap. Financing part of a development project by 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-local-currency swap. Local residents, instead of a foreign investor, buy their own currency’s debt in the secondary market using funds they hold abroad or foreign currency acquired in the exchange market. These swaps are designed primarily for the repatriation of flight capital.
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 rescheduling).
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, and in the latter case will carry 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, debt and debt service reduction operations, 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.)
Debt sustainability. As defined in the context of the enhanced HIPC Initiative, the position of a country when the net present value (NPV) of (public and publicly guaranteed) debt to exports is below 150 percent. For highly open economies (indicated by an exports-to-GDP ratio of at least 30 percent) making a strong fiscal effort (expressed by a fiscal revenue-to-GDP ratio of at least 15 percent) the threshold is equivalent to an NPV of debt-to-revenue ratio of 250 percent.
Debt sustainability analysis (DSA). 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. It is the basis for the annual World Bank report, Global Development Finance (formerly, World Debt Tables).
Decision point. In the context of the HIPC Initiative, point at which a country’s eligibility for assistance under the HIPC Initiative is determined based on the debt sustainability analysis. In order to reach a decision point, a country needs to establish a credible track record in the context of an IMF- and World Bank-supported program, while receiving a flow rescheduling on Naples terms from Paris Club creditors and comparable treatment from other official bilateral and commercial credits. 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 period of time, as specified in the Agreed Minute.
Development Assistance Committee (DAC) of the OECD. Established in 1960 as the Development Assistance Group with the objective to expand the volume of resources made available to the developing countries and to improve their effectiveness. The DAC periodically reviews both the amount and 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 the promotion of 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.
Effectively rescheduled debt. The proportion of total payments covered by a rescheduling agreement that is rescheduled or deferred until after the consolidation period.
Eligible debt or debt service. In the context of the Paris Club, debt that can be rescheduled, namely debt 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).
Escrow accounts. Accounts in offshore banks (outside the debtor country) through which a portion of the export proceeds of a debtor is channeled to cover future debt-service payments. Creditors thus obtain extra security for their loans and effective priority on debt service.
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 suppliers credits; export credits extended by the supplier’s bank are known as buyers credits. (See also officially supported export credits.)
Exposure. In the context of export credits, the total amount of debt of a country 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. 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 to be pursued 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 4 ½ 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 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 mid-point of the consolidation period.
Graduated payments (or “blended payments”). In the context of Paris Club rescheduling, 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.
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.
Grant-like 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. They are, nevertheless, counted as external debt, since the creditor is nonresident.
Heavily indebted poor countries (HIPCs). Group of 41 developing countries identified for analytical purposes in 1995: includes 32 countries with a 1993 GNP per capita of
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.)
HIPC Initiative—Debt Initiative for Heavily Indebted Poor Countries. 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 1996 and revised in 1999. The Initiative envisages comprehensive action by the international financial community, including multilateral institutions, to assist eligible HIPCs achieve debt sustainability, provided a country builds a track record of strong policy performance.
HIPC Trust Fund. Trust Fund administered by IDA to provide debt relief through grants 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 PRGF-HIPC Trust.)
Houston terms. See lower-middle-income country terms.
IMF arrangement. Agreement between the IMF and a member country based on which the IMF provides financial assistance to a member country seeking to redress balance of payments problems and to help cushion the impact of adjustment. Nonconcessional resources are provided mainly under Stand-By Arrangements (SBAs) and the Extended Fund Facility (EFF), and concessional resources are provided under the Poverty Reduction and Growth Facility (PRGF).
Implementing agreements. See bilateral Paris Club 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, a 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. As each may prefer its liabilities in the other form, they may therefore arrange a swap. Normally, the differential in the rates is insured with a broker to protect the more sound 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 typically countries eligible to receive only highly concessional credits from the IDA (“IDA-only countries”).
Lower-middle-income country terms (LMIC). 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 provided originally for flat repayment schedules, but in recent years often graduated payment schedules have been agreed for commercial credits with up to 18-year maturities, including a grace period of up to 5 years. ODA 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. Lower-middle-income countries are countries with a per capita GNI in 2001 of between
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 since the 1990s increasingly with graduated payment schedules that have a maturity of up to 18 years and a grace period of 2–3 years of 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 per capita GNI in 2001 of between
Mixed credits. Credits containing an aid element, either in the form of a grant or of 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, and other multilateral development banks.
Multiyear rescheduling agreements (MYRA). An agreement granted by official creditors, that covers consolidation periods of two or more years in accordance with multiyear IMF arrangements such as EFF and PRGF. 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 debt-to-exports ratio. 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 Consensus. Formally the “Arrangement on Guidelines for Officially Supported Export Credits,” a framework of rules governing export credits agreed 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). Turkey and Mexico also attend this Group as observers. Aside from coordinating export credit terms, the OECD Export Credit Group has also served as a forum for the exchange of 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 that meet the following test: (1) its main objective is the promotion of 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 (ECA) 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 (suppliers’ credit), or through a commercial bank in the form of financial trade-related credit provided either to the supplier (also suppliers’ credit) or to the importer (buyers’ credit). It can also be extended directly by an ECA 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 flows (other ODF). Development-oriented official flows that do not qualify as official development assistance (ODA). 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 on a regular basis in Paris since 1956 to reschedule bilateral debts; the French Treasury provides the Secretariat. Creditors meet with a debtor country in order 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 war, revolution, or 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, or earthquakes.
Post-cutoff date debt. See cutoff date.
Poverty Reduction and Growth Facility (PRGF). In 1999, the PRGF replaced the ESAF as the IMF’s concessional loan window.
Poverty Reduction Strategy Papers (PRSPs) are prepared by low-income member countries through a participatory process involving domestic stakeholders as well as external development partners, including the World Bank and the IMF. A PRSP describes a country’s macroeconomic, structural, and social policies and programs over a three-year or longer horizon to promote broad-based growth and reduce poverty, as well as associated external financing needs and major sources of financing. National PRSPs are available on the World Bank and IMF websites by agreement with the member country.
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 the London Clubs until 1983. Since then however, previously rescheduled debt frequently has been rescheduled again for countries facing acute payments difficulties.
PRGF-HIPC Trust. IMF’s participation in the PRGF and the HIPC Initiative are administered through this Trust.
Quantitative (or cover) limits. Mechanisms by which export credit agencies restrict the amount of cover offered to a particular country. These can, 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 limiting exposure to countries considered to be risky.
Rights Accumulation Program (RAP). 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 PRGF, 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 specified 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 (though 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/comprehensive coverage. Short-term debt in the context of the Paris Club has a maturity of under and 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 the signing of 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 (SBA). An IMF lending facility established in 1952 through which a member country can use IMF financing up to a specified amount to overcome balance of payments difficulties of a short-term or cyclical character. Installments are normally phased on a quarterly basis, with their release conditional upon meeting performance criteria and the completion of periodic reviews. Performance criteria generally cover credit policy, government or public sector borrowing requirements, trade and payments restrictions, foreign borrowing, and reserve levels. These criteria allow both the member and the IMF to assess progress in policy implementation and may signal the need for further corrective policies. Stand-By Arrangements typically cover a 12- to 18-month period (although they can extend up to 3 years). Repayments are to be made over 5 years including a grace period of 33/4 years.
Standstill. An interim agreement between a debtor country and its commercial banking creditors as a result of which principal repayments of medium- and long-term debt are deferred and short-term obligations are rolled over, pending agreement on a debt reorganization. The objective is to give the debtor continuing access to a minimum 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, an exit rescheduling of the eligible stock of debt (pre-cutoff date, non-ODA debt) for countries that have graduated from flow rescheduling. Stock operations on Cologne terms are given to countries that have reached their completion points under the enhanced HIPC Initiative (see Tables A5.5, A5.6, and A5.7).
Structural Adjustment Facility (SAF)/Enhanced Structural Adjustment Facility (ESAF). The Structural Adjustment Facility (SAF), established in 1986, and succeeded in 1987 by the Enhanced Structural Adjustment Facility, was until 1999 (when it was replaced by the PRGF) the concessional loan window of the IMF. ESAF was available to low-income member countries facing protracted balance of payments problems and provided resources at an annual interest rate of 0.5 percent, 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 GLOSSARY OF TERMS are not subject to rescheduling; therefore, precutoff date loans are effectively subordinated to new lending.
Suppliers’ 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.
Upper-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 payments schedules with usually up to 15 years’ maturity and 8 years’ grace period for commercial credits. ODA credits are rescheduled over 10 years, including 5–6 years’ grace. In the context of the World Bank classification, upper middle-income countries are those with a per capita GNI in 2001 of
Figure A5.1.Evolution of Paris Club Low-Income Rescheduling Profiles1
Sources: Paris Club Secretariat; and IMF staff estimates.
1Assuming a market interest rate of 8 percent. The payments profiles reflect the actual distribution of the debt reduction option (DR), debt service reduction option (DSR), the capitalization of moratorium interest option (CMI), or the long maturities option (LM). For an explanation of these terms, see the Glossary.
2Assuming equal principal repayments over 10 years including 5 years of grace.
3Equal distribution among the options (DR, DSR, and LM).
4Distribution (in percent) of DR 40; DSR 45; CMI 10; LM 5.
580 percent reduction in NPV terms provided in the context of the original HIPC Initiative. Distribution (in percent) of DR 50; DSR 50.
667 percent reduction in NPV terms. Distribution among options (in percent): DR 45; DSR 45; CMI 10. The LM option is not included, given that any creditor choosing this option undertakes best efforts to change to a concessional option at a later date when feasible.
790 percent reduction in NPV terms provided in the context of the enhanced HIPC Initiative. DR option only.
|Middle-Income Countries 1||Lower-Middle-income Countries (Houston terms)1||Naples terms options4|
|DSR||Cologne terms options5,6|
|Toronto terms options||London terms options3||Maturing flows||Lyon terms options5|
|Implemented||…||Since Sept. 1990||Oct. 1988–June 1991||Dec. 1991–Dec. 1994||Since January 1995||Dec. 1996–Oct. 1999||Since Nov. 1999|
|Grace (in years)||5–61||Up to 81||8||8||14||6||—||5||167||6||—||3||8||20||6||8||8||20||6|
|Maturity (in years)||91||151||14||14||25||23||23||23||25||23||33||33||33||40||23||40||40||40||23|
|Reduction in net present value (in percent)||33||20–3013||50||50||50||67||67||67||67||—||80||80||80||906|
|Grace (in years)||5–6||Up to 10||14||14||14||12||12||12||16||16||16||16||16||20||16||16||16||20||16|
|Maturity (in years)||10||20||25||25||25||30||30||30||25||40||40||40||40||40||40||40||40||40||40|
Since the 1992 agreements with Argentina and Brazil, creditors have made increasing use of graduated payments schedules (up to 15 years’ maturity and 2–3 years’ grace for middle-income countries; up to 18 years’ maturity for lower-middle-income countries).
DR = debt-reduction option; DRS = debt-service-reduction option; CMI = capitalization of moratorium interest; and LM = nonconcessional option providing longer maturities. Under London, Naples, Lyon, and Cologne terms, there is a provision for a stock-of-debt operation, but no such operation took place under London terms.
These have also been called “Enhanced Toronto” and “Enhanced Concessions” terms.
Until November 1999 included an option of a 50 percent level of concessionality for countries with a per capita income of more than $500, and an overall net present value of debt-export ratio of less than 350 percent. For a 50 percent level of concessionality, terms were equal to London terms except for the debt-service-reduction option under a stock-of-debt operation that included a three-year grace period.
These terms are to be granted in the context of concerted action by all creditors under the HIPC Initiative. They also include, on a voluntary basis, an ODA debt-reduction option.
Creditors agree on a case-by-case basis on a net present value debt reduction of 90 percent on pre-cutoff date commercial (non-ODA) debt, or more if this is required in the context of proportional burden sharing with other creditors to achieve debt sustainability in the debtor country. All creditors will seek to apply the DR option, but if that is not possible there is also a DSR option with very long maturities and grace periods.
Fourteen years before June 1992.
Interest rates are determined in the bilateral agreements implementing the Paris Club Agreed Minute. M = market rates; and R= reduced rates.
The interest rate was 3.5 percentage points below the market rate or half of the market rate if the market rate was below 7 percent.
Reduced to achieve a 50 percent net present value reduction.
Reduced to achieve a 67 percent net present value reduction; under the DSR option for the stock operation, the interest rate is slightly higher, reflecting the three-year grace period.
Reduced to achieve an 80 percent net present value reduction.
The reduction of net present value depends on the reduction in interest rates and therefore varies. See Footnote 9.
|Bosnia and Herzegovina||6832||683||1|
|São Tomé and Principe||28||28||1|
|Trinidad and Tobago||209||110||319||2|
|Yemen, Republic of||113||1,446||4206||1,979||3|
|Congo, Republic of||756||1,052||1,175||1,753||4,741||4|
|Burkina Faso||71||36||646||42||402, 7||215||5|
|Yugoslavia, Fed. Rep. of||500||812||901||1,291||4,3093||7,813||5|
|Central African Republic||72||13||14||28||4||32||23||186||7|
|Congo. Dem. Rep. of||270||170||40||1,040||500||1,497||408||429||671||1,530||8,163||14,718||11|
Includes significant double-counting in cases where previously rescheduled debt has been rescheduled; also includes tranches that may not have been implemented.
Total includes subsequent one or more amendments.
Total value of debt restructured.
Limited terms of reference rescheduling of certain long-standing arrears.
Stock-of-debt operation under Naples terms.
Stock-of-debt operation under Cologne terms.
Stock-of-debt operation under Lyon terms.
The Philippines’ 1994 rescheduling agreement was canceled at the authorities’ request.
Coverage was broadened in July 1997.
Gabon’s 1991 rescheduling agreement was declared null and void.
|Debt service due||1,199||11,786||12,984|
|Pre-cutoff date debt||1,197||10,833||12,029|
|Not previously rescheduled||1,120||9,564||10,683|
|Post-cutoff date debt||1||843||844|
|Debt service treated||1,084||7,976||9,060|
|Not previously rescheduled||1,057||6,951||8,008|
|Deferred for the first time||—||—||—|
|Post-cutoff date debt||—||—||—|
|Debt service payable||209||4,323||4,532|
|Pre-cutoff date debt not treated5||113||2,857||2,970|
|Not previously rescheduled||63||2,613||2,676|
|Post-cutoff date debt||1||843||844|
|Debt service payable in percent of debt service due||17||37||35|
Includes the reschedulings for Georgia I, Indonesia III, Jordan VI, Kyrgyz Republic I, Pakistan II, and Ukraine I.
At the beginning of the consolidation period.
Debt service falling due during the consolidation period.
Including deferrals of debt treated under the most recent rescheduling agreement.
Including late interest if not consolidated.
|Debt service due||10,953||5,715||16,668|
|Pre-cutoff date debt||9,793||4,504||14,296|
|Not previously rescheduled||1,352||776||2,128|
|Post-cutoff date debt||1,044||1,197||2,241|
|Debt service treated||12,403||4,494||16,896|
|Not previously rescheduled||1,316||678||1,994|
|Deferred for the first time||2,656||240||2,896|
|Post-cutoff date debt||944||55||999|
|Debt service payable||561||1,569||2,131|
|Pre-cutoff date debt not treated5||45||251||296|
|Not previously rescheduled||36||98||134|
|Post-cutoff date debt||101||1,141||1,242|
|Debt service payable (in percent of debt service due)||5||27||13|
Includes the reschedulings for Cameroon VI, Chad IV, Côte d’Ivoire IX, the Democratic Republic of the Congo XI, Ethiopia III, Ghana II, Ghana III, Guinea VI, Guinea-Bissau IV, Madagascar IX, Malawi IV, Nicaragua IV, Niger X, Rwanda II, and Sierra Leone VIII. Also includes the following amendments: Benin V Amendments 1 through 3, Burkina Faso IV Amendments 1 and 2, Ethiopia III Amendment, Mali V Amendments 1 and 2, Senegal XIII Amendment, Sierra Leone VIII Amendment, and Zambia VIII Amendment.
At the beginning of the consolidation period.
Debt service falling due during the consolidation period.
Includes deferrals of debt treated under the most recent rescheduling agreement.
Includes late interest if not consolidated.
|Stocks Treated||Stocks Not Treated||Total Stocks|
|Pre-cutoff date debt||420||1,388||1,808|
|Not previously rescheduled||411||3||414|
|Post-cutoff date debt||—||396||396|
Rescheduling for the Republic of Yemen III.
|Stocks Treated||Stocks Not Treated||Total Stocks|
|Pre-cutoff date debt||16,753||—||16,753|
|Not previously rescheduled||10,809||—||10,809|
|Post-cutoff date debt||—||2,096||2,096|
Rescheduling for Pakistan III and the Federal Republic of Yugoslavia V. Pakistan’s rescheduling covered the full stock of debt owed to the Paris Club, without any debt reduction.
|Stocks Treated||Stocks Not Treated||Total Stocks|
|Pre-cutoff date debt||4,522||502||5,024|
|Not previously rescheduled||460||145||605|
|Post-cutoff date debt||177||1,129||1,306|
Rescheduling for Bolivia VIII, Burkina Faso V (including completion point topping-up), Mauritania VIII, Mozambique VII, and Tanzania VII.
|Debtor Countries||Number of Reschedulings1||Date of Agreement (M/D/Y)||Amount Consolidated2 (Millions of U.S. dollars)||Consolidation Period3 (Months)||Terms4|
|Grace (Years)||Maturity (Years)|
|Benin||V Amended 1||07/02/01||3||6||Cologne terms7|
|Benin||V Amended 2||03/05/02||4||6||Cologne terms7|
|Benin||V Amended 3||09/18/02||5||14||Cologne terms7|
|Bosnia and Herzegovina||I||10/28/98||674||10||Naples terms|
|Bosnia and Herzegovina||I Amended||07/28/00||9||12||Naples terms|
|Burkina Faso||I||03/15/91||71||15||Toronto terms|
|Burkina Faso||II||05/07/93||36||33||London terms|
|Burkina Faso||III||06/20/96||64||Stock||Naples terms|
|Burkina Faso||IV||10/24/00||2||12||Cologne terms7|
|Burkina Faso||IV Amended 1||07/02/01||1||6||Cologne terms7|
|Burkina Faso||IV Amended 2||03/05/02||2||6||Cologne terms7|
|Burkina Faso||V||06/20/02||38||Stock||Cologne terms|
|Burkina Faso||V Amended||09/09/02||2||Stock||Completion point top-up|
|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|
|Central African Republic||VII||09/25/98||23||34||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|
|Congo, Democratic Republic of||XI||09/13/02||8,163||36||Naples terms|
|Côte d’Ivoire||VII||03/22/94||1,849||37||London terms|
|Côte d’Ivoire||VIII||04/24/98||1,332||36||Lyon terms|
|Côte d’Ivoire||IX||04/10/02||1,822||33||Lyon terms|
|Equatorial Guinea||II||03/03/89||10||Toronto terms|
|Equatorial Guinea||III||04/02/92||32||12||London terms|
|Equatorial Guinea||IV||12/15/94||51||21||London terms|
|Ethiopia||III Amended||06/18/02||95||29||Cologne terms7|
|Madagascar||VIII Amended 1||01/13/00||23||12||Naples terms|
|Madagascar||VIII Amended 2||08/18/00||34||6||1.5||8.0|
|Mali||V Amended 1||07/02/01||0.5||6||Cologne terms7|
|Mali||V Amended 2||06/25/02||0.7||12||Cologne terms7|
|Sao Tome and Principe||I||05/16/00||28||37||Naples terms|
|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|
|Sierra Leone||VIII||10/16/01||177||36||Naples terms|
|Sierra Leone||VIII Amended||03/10/02||35||36||Cologne terms7|
|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|
|Yemen, Republic of||I||09/24/96||113||10||Naples terms|
|Yemen, Republic of||II||11/20/97||1,446||36||Naples terms|
|Yemen, Republic of||III||06/14/01||420||Stock||Naples terms|
|Yugoslavia, Federal Rep. of||I||05/22/84||500||12||4.0||6.5|
|Yugoslavia, Federal Rep. of||II||05/24/85||812||16||3.8||8.3|
|Yugoslavia, Federal Rep. of||III||05/13/86||901||12||3.9||9.4|
|Yugoslavia, Federal Rep. of||IV||07/13/88||1,291||15||5.9||9.4|
|Yugoslavia, Federal Rep. of 18||V||12/28/01||4,309||Stock||6.0||22.0|
Roman numerals indicate, for each country, the number of debt reschedulings, in the period beginning 1976. For terms of reference reschedulings (TOR), date of informal meeting of creditors on the terms to be applied in the bilateral reschedulings.
Includes debt service formally rescheduled as well as postponed maturities.
In a number of cases consolidation period was extended subsequently.
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.
Naples terms with a 50 percent NPV reduction.
Graduated payments schedule.
The existing Paris Club agreement was topped up to Cologne terms.
Total value of debt restructured for Egypt in 1991 includes the cancellation of military debt by the United States.
Gabon’s 1991 rescheduling agreement was declared null and void.
Small amounts of pre-cutoff debt were rescheduled on Naples terms.
Creditors met under the chairmanship of the Group of Participating Creditor Countries or as Group of Official Bilateral Creditors.
Initial rescheduling was on Naples terms. It was topped up in January 1998 to Lyon terms retroactively from July 1997.
With 90 percent debt reduction.
The 1994 rescheduling was canceled at the request of the authorities.
Total value of debt restructured for Poland in 1991.
Twenty-year maturity for debt not previously rescheduled.
The amount is preliminary.
Reduction of 66 percent in NPV achieved in two stages.
World Economic and Financial Surveys
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1999, Debt Relief for Low- Income Countries: The Enhanced HIPC Initiative, IMF Pamphlet Series No. 51 (Washington: International Monetary Fund).
2002, “Goals for Development: History, Prospects and Costs,”Policy Research Working Paper No. 2819 (Washington: World Bank).
1988, International Finance Handbook,Vol. 2, Part 7 (New York: Wiley).eds.,
2002, “Support the EX-IM Bank: It Has Work to Do!”International Economic Briefs, No. PB02–4 (Washington: Institute for International Economics).
International Monetary Fund, 2002, “Assessing Sustainability,”May (Washington), available via the Internet at http://www.imf.org/external/np/pdr/sus/2002/eng/052802.htm.
International Monetary Fund, 2003, “Trade Finance in Financial Crises: Assessment of Key Issues,”December (Washington), available via the Internet at http://www.imf.org/external/np/pdr/cr/2003/eng/120903.htm.
International Monetary Fund, and World Bank, 2001, “Debt Relief for Poverty Reduction: The Role of the Enhanced HIPC Initiative” (Washington). Also available via the Internet at http://www.imf.org/external/pubs/ft/exrp/debt/eng/index.htm.
International Monetary Fund, 2002a, “Heavily Indebted Poor Countries (HIPC) Initiative: Status of Implementation,”April (Washington), available via the Internet at http://www.imf.org/external/np/hipc/2002/status/041202.htm.
International Monetary Fund, 2002b, “The Enhanced HIPC Initiative and the Achievement of Long-Term External Debt Sustainability,”April (Washington), available via the Internet at http://www.imf.org/external/np/hipc/ 2002/lteds/041502.htm.
International Monetary Fund, 2002c, “Heavily Indebted poor Countries (HIPC) Initiative: Status of Implementation,”September (Washington), available via the Internet at www.imf.org/external/np/hipc/2002/status/092302.htm.
International Monetary Fund, 2003a, “Heavily Indebted Poor Countries (HIPC) Initiative—Statistical Update,”March (Washington), available via the Internet at http://www.imf.org/external/np/hipc/2003/ update/031003.htm.
International Monetary Fund, 2003b, “Heavily Indebted Poor Countries (HIPC) Initiative—Status of Implementation,”September (Washington), available via the Internet at http://www.imf.org/external/np/hipc/2003/status/091203.htm.
1995, Officially Supported Export Credits: Recent Developments and Prospects, World Economic and Financial Surveys (Washington: International Monetary Fund).
2003, “The Impact of External Indebtedness on Poverty in Low-Income Countries,”IMF Working Paper No. 03/61 (Washington: International Monetary Fund).
Organization for Economic Cooperation and Development, 2001, Development Cooperation Report 2001 (Paris), available via the Internet at http://www.oecd.org/document/39/0,2340,en_2649 _201185_2068071_1_1_1_1,00.html.
Organization for Economic Cooperation and Development, 2003, OECD DAC Countries Begin Recovery in Development Aid: 5% Increase in 2002 (Paris), available via the Internet at http://www.oecd.org/document/42/0,2340,en_2649_34447_2507754_1_1_1_1,00.html.
2001, Official Financing for Developing Countries, World Economic and Financial Surveys (Washington: International Monetary Fund).
1998, “Export Credit Agencies, Trade Finance and South East Asia,”IMF Working Paper No. 98/175 (Washington: International Monetary Fund).
1999, The Changing Role of Export Credit Agencies (Washington: International Monetary Fund).
2002, “A Study on the Activities of IFIs in the Area of Export Credit Insurance and Export Finance,”INTAL-ITD-STA Occasional Paper Series, No. 16 (Buenos Aires: Inter-American Development Bank, Integration and Regional Programs Departments).
United Nations, 2001, “Report of the High Level Panel on Financing for Development,”Document A/55/1000 (New York).
World Bank, 2002, World Development Report 2000/2001 (New York: Oxford University Press).
ODF consists of ODA and other official flows (OOF) provided by OECD-DAC members and multilateral institutions. ODA reflects concessional funds provided to developing countries, while OOF consists of nonconcessional funds provided to developing countries, as well as official funds provided to some transition and middle-income countries. This review is largely based on developments to end-2001 using creditor-based data from the OECD-DAC.
The 1999 figures of OOF reflected substantial funds provided by Japan to the Asian Development Fund.
Data for 2002 are based on preliminary figures released by the DAC. For details, see Organization for Economic Cooperation and Development (2003).
See four new sets of guidelines adopted by OECD-DAC (Organization for Economic Cooperation and Development, 2001).
As highlighted in Ross and Harmsen (2001), recent work on aid effectiveness has shown that strong national ownership of reform programs contributes significantly to the effectiveness of external assistance.
In this regard, OECD-DAC donors made a commitment in April 2001 to untie aid provided to the least developed countries.
The Millennium Development Goals include commitments to combat extreme poverty and hunger, achieve universal primary education, promote gender equality, reduce child mortality, improve maternal health, combat diseases, ensure environmental sustainability, and maintain a global partnership for development.
See Devarajan, Miller, and Swanson (2002) and United Nations (2001). The latter report (also known as the “Zedillo report”) estimated that additional financing of $50 billion would be required to meet the MDGs.
See Organization for Economic Cooperation and Development (2001). In examining some of the financing implications of meeting the MDGs, the OECD calculates that a rise in the ODA/GNI ratio from the present level of 0.22 percent to 0.32 percent by 2010 would—assuming growth of 2.5 percent in the national income of DAC members—result in a doubling of ODA from its 2000 levels.
The G-8 also adopted the Africa Action Plan as a framework for action in support of the New Partnership for Africa’s Development (NEPAD). The G-8 donors indicated that—assuming strong African policy commitments and given recent assistance trends—half or more of the increase in development assistance could be directed to African nations that govern justly, invest in their own people, and promote economic freedom.
Does not include estimated costs for the Lao People’s Democratic Republic, Liberia, Somalia, and Sudan.
For instance, according to some cross-country estimates a debt-to-GDP ratio of 40 percent is a useful benchmark, above which a country’s conditional probability of a debt crisis is around 15–20 percent, while below 40 percent the probability of a debt crisis is estimated at 2–5 percent.