Chapter

VI Financing from Multilateral Institutions

Author(s):
International Monetary Fund
Published Date:
December 1995
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The level of both gross and net multilateral lending63 to all developing countries64 in 1994, at around $37 billion and $14 billion, respectively, was broadly unchanged from the four previous years (Table 15), The regional pattern of these disbursements, however, has varied considerably over this period. There was a notable increase in 1994 of around $1 billion in gross and net disbursements both to sub-Saharan Africa (reflecting multilateral support after the devaluation of the CFA franc) and to North Africa and the Middle East, By contrast, gross disbursements to Western Hemisphere countries recorded a sharp decrease in 1994 of $3 billion (net disbursements fell by $1 billion), and while gross disbursements to Asia and other countries increased slightly, net disbursements to each region fell by almost $2 billion.

Both gross and net disbursements to heavily indebted poor countries65 rose by around $1 billion in 1994, after declines in 1993,66 to reach record levels of over $6 billion and $3½A billion, respectively.67, 68 All of the heavily indebted poor countries continued to receive positive net disbursements from multilateral institutions in 1994 (Table 16), except for countries not undertaking adjustment policies (Liberia, Myanmar, Somalia, and Zaire).

Multilateral Debt

The share of multilateral debt in the total debt of developing countries69 has stabilized at around 23 percent during the first half of the 1990s after a continued rise during the 1980s (Chart 12 and Table 17).70 The share of multilateral debt in the total debt of the heavily indebted poor countries, after declining somewhat in the second half of the 1980s, has risen by 5 percentage points over the past five years, and reached 31 percent at the end of 1994.71

For all developing countries, the share of concessional debt in total multilateral debt has risen by 7 percentage points over the last decade. This development was even stronger for the heavily indebted poor countries, where the share of concessional debt in total multilateral debt has increased by 21 percentage points over the past decade to reach 70 percent at the end of 1994 (Table 18).72

In recent years, the IMF has provided increasing fi-nancial support for low-income countries in the form of loans under the SAF and the ESAF. As a consequence, loans outstanding under these facilities at the end of 1994 reached a record high level of $7 billion, reflecting net disbursements in l994ofover$1 billion (Table 18).73

Multilateral Debt Service

Notwithstanding the buildup of multilateral debt, multilateral debt service has remained broadly unchanged over the last decade in relation to exports of goods and services; indeed, multilateral debt-service ratios have declined hy 1-1½ percentage points from the peaks of the mid-1980s (Chart 13, Table 19). Over the last 5 years, the multilateral debt-service ratio has remained at around 4 percent for all developing countries, 9½ percent for low-income rescheduling countries, 8½ percent for heavily indebted poor countries. The broadly stable level of debt service results from the continued shift by multilateral institutions toward conces-sional lending, as described above.

Table 15.Cross and Net Disbursements from Multilateral Institutions by Region and Income, 1980-941(In millions of U.S. dollars)
Annual Average
1980-841985-89199019911992199319942
All countries3Gross21,74225,99636,36439,11035,61437,11037,478
Net16,8069,10215,36817,68913,83415,23413,697
By region
Sub-Saharan AfricaGross3,3904,2975,3395,2405,3474,9225,896
Net2,7112,3283,0783,0793,3912,9623,643
North Africa and ihe Middle EastGross1,2572,2492,3433,4122,9612,5313,726
Net8641,0436161,4388934271,493
AsiaGross7,4028,38211,32212,68311,77211,42411,711
Net6,0623,1975,1807,1526,3626.0354,317
Western HemisphereGross6,6408,53713,8149,8969,16011,5378,769
Net4,9293,0895,399609-6061,425252
OtherGross3,0532,5313,5457,8796,3726,6967,376
Net2,9951,3541,0352,0871,7542,9761,197
By debt-servicing record
Nonrescheduling countriesGross8,65311,01016,60219.57616,69416,02616,205
Net7.0824,5008,82812.0289,0638.4416,290
Rescheduling countries4Gross13,09014,98619,76219,53418,91921,08421,273
Net9,7904,6036,5405,6604,7716,7937,407
Of which: low-income countries5Gross2,6722,8993,8723,8133,8733,1884,264
Net2,1031,5742,1442,1702,5801,8612,715
Memorandum item
Heavily indebted poor countries6Gross3,6464,4905,8115.5875,4444,9166.132
Net2,9082,4863,2853,1923,38016823,668
Source: World Bank Debtor Reporting System.

Creditor Composition of Multilateral Debt

The World Bank is the largest multilateral creditor; its share in total multilateral debt of developing countries has remained at about 56 percent over recent years, with an increasing relative share of debt to the International Development Association (IDA) (Table 20). The three main regional development banks together have accounted for about 20 percent of total multilateral debt, the IMF for some 14 percent, and European institutions and other smaller organizations for the remainder.

For heavily indebted poor countries, the share of Ihe World Bank in total multilateral debt increased from 47 percent in 1985 to 56 percent in 1994; reflecting the increasing move toward concessional lending to these countries, the share of IDA debt increased from 26 percent in 1985 to 44 percent in 1994, while the share of debt to the International Bank for Reconstruction and Development (IBRD) fell from 21 percent to 12 percent (Table 21). Continuous growth in both nonconcessional and concessional lending by the three main regional development banks resulted in a doubling of their share between 1985 and 1994, when they accounted for over 20 percent of these countries’ multilateral debt. Much slower growth in lending by the IMF and other multilateral institutions was reflected in a halving of their share to 22 percent in 1994. For the IMF, this partly reflected the revolving nature of IMF resources and its monetary character.

Table 16.Heavily Indebted Poor Countries: Net Disbursements from Multilateral Institutions, 1980-941
Annual AverageAnnual Average
1980-841985-8919901991199219931994 21980-841985-8919942
(In millions of U.S. dollars)(In percent of exports of goods and services)
Angola17135171 120-0.30,7
Benin263971815976618.38.59.4
Bolivia9614773103176881119.819.811.8
Burkina Faso28413185971201338.910.418.1
Burundi3268526087556931.953.549.8
Cameroon56761301053-831772.63.37.1
Central African Republic2040913827296111.322.629.2
Chad429746412751723.815.130.6
Congo3935-21-32-823.33.77.8
Cole d’Ivoire3051530716063-13632410.60.47.4
Equatorial Guinea68-1111217101.717.112.2
Ethiopia5272971031873751788.68.712.5
Ghana1341891902951352057923.322.74.1
Guinea2459541441422162014.59.025.3
Guinea-Bissau1525383821151964.1105.918.2
Guyana4619779147471914.37.74.9
Honduras13025475925215810315.22.69.0
Kenya2039620886-55869011.25.33.0
Lao People’s Democratic Republic9755360827819.028.2
Liberia7416-2-13--12-1014.334-1.9
Madagascar871087812835616121.125.78.6
Mali59601099489557.123.116.010.1
Mauritania523843572556016.58.011.2
Mozambique3551011212171551981.222.8330.0
Myanmar8051512221-1717.113.5
Nicaragua521472413033329.94.96.9
Niger4264577917489.216.615.5
Nigeria1182852102151851070.93.30.9
Rwanda2450317856371615.227.914.8
Sao Tome and Principe37144119121422.965.9
Senegal1181095063166679011.99.25.9
Sierra Leone216-5-320516312.04.033.1
Somalia80544013---36.450.1-
Sudan2309516911694919520.88.8146
Tanzania959028619132513812115.816.813.7
Togo4235323531-189.56.83.9
Uganda1217224818222614722235.422.142.7
Vietnam12--341-37230
Yemen, Republic of845214114348726.04.94.3
Zaire145139422065953-147.66.6-1.0
Zambia13974125011311130212.17.825.9
Total2,9082,4863,2853,1923,3802,6823,6686.86.67.9
Source: World Bank Debtor Reporting System.

For concessional multilateral lending, the IDA continued to be the largest source, accounting for nearly two thirds of such loans as at the end of 1994 (Table 22). The three main regional development banks remained the next largest source (about one fourth of the total). The IMF held about 6 percent of concessional loans, and the remainder was shared by the European institutions and other smaller institutions.

Lending terms of the World Bank and the three main regional development banks generally provide for variable interest rates on nonconcessional resources, based on the cost of funding plus a margin determined on the basis of a targeted net income. Concessional resources are generally provided through special windows to eligible countries, and fixed service charges are applied instead of interest.74 Maturity and grace periods vary, generally depending on the income level of the recipient country; nonconcessional loans are typically for 20-30 years, while concessional loans are for up to 40-50 years. In comparison, maturities of IMF resources are shorter at 5-10 years; nonconcessional EU (EC) loans have maturities of about 5 years payable in bullet payments at maturity.75

Chart 12.Developing Countries: Public External Debt by Creditor, 1980-94 1

(In billions of U.S. dollars)

Sources: World Bank Debtor Reporting System; and IMF staff estimates.

1 Medium- and long-term public and publicly guaranteed debt, including that to the IMF.

2 Provisional.

Chart 13.Developing Countries: Debt-Service Payments on Multilateral Debt, 1985-94

(In percent of exports of goods and services)

Sources: World Bank Debtor Reporting System; and IMF staff estimates.

1 Provisional.

The average terms of actual commitments in 1993 were much shorter (Table 22). The grant element of concessional lending averaged 60 percent when compared with market interest rates,76 but differed considerably among major multilateral institutions; based on the CIRR calculation method, the grant element of the IDA is around 70 percent and of ESAF slightly over 40 percent.

Table 17.Developing Countries: Public External Debt by Creditors, 1980-941(In billions of U.S. dollars: and in percent)
Annual
Average
1980-8419851986198719881989199019911992199319942
All countries 3
Total public external debt5037568741,0081,0121,0361,1041,1521,1711,2461,331
Of which: (in percent)
Multilateral18.219.620.521.320.520.622.123.023.223.323.2
IMF4.S5.34.94.33.53.13.13.33.33.13.2
Other13.414.315.617.017.017.519.019.719.920.220.0
Official bilateral27.026.126.627.729.430.932.233.633.834.234.7
Private54.754.352.851.050.148.545.743.443.042.542.1
Low-income rescheduling countries4
Total public external debt456475899094105108109110117
Of which: (in percent)
Multilateral28.328.629.029.930430.430.932.433.334.536.2
IMF8.67.87.26.66.15.44.94.74.54.34.7
Other19.720.821.823.324.325.026.027.728.730.231.6
Official bilateral44.048.349.750.751.752.853.752.652.752.151.5
Private27.723.121.319.417.916.815.415.014.013.412.3
Heavily indebted poor countries5
Total public external debt6593113141158167186190188191200
Of which: (in percent)
Multilateral26.427.827.527.124.724.725.526.928.029.130.5
IMF7.67.16.25.44.43.93.73.63.53.33.7
Other18.820.721.321.820.320.821.923.324.525.826.8
Official bilateral39441.346.045.650.752.954.354.455.654.854.7
Private34.230.926.427.224.522.420.118.816.416.014.9
Sources: World Bank Debtor Reporting System: and IMF staff estimates.
Table 18.Multilateral Debt on Concessional Terms, 1980-941
Annual
Average
1980-8419851986198719881989199019911992199319942
(In millions of U.S. dollars)
Total multilateral debt
All countries392.581148,001179,312214,715207,713213,620244,037264,874271,930290,579309,200
Low-income rescheduling countries412,96218,25221,81026,70527,29028,47532,49434,92936,33438,12542,297
Heavily indebted poor countries517,27425,75931,16538,27939,09141,31047,51351,15152,78755,50860,816
Of which:
Multilateral concessional debt
All countries330.80442.39448.20156.75860.32666.06575.49483.90989,78497.338110,086
Low-income rescheduling countries46,4809,20611,07513,90415,16216,80819,93622,40324,12926,21929,961
Heavily indebted poor countries58,67112,59215,19619,08321,08723,90928,82032,54434,80337,75342.450
(In percent of total multilateral debt)
Multilateral concessional debt
All countries334.128.626.926.429.030.930 031.733.033.535.6
Low-income rescheduling countries450.150.150852.155.659.061.464.166.468.870.8
Heavily indebted poor countries550.448.948.849.953.957.960763.665.968,069.8
(In millions of U.S. dollars)
Memorandum items
SAF/ESAF2
All countries33,1532,6912,4452,6352,3823,0673,6594,7255,2585,4436,788
Low-income rescheduling countries47736206198248441,1101,4021,6591,8791,9632,590
Heavily indebted poor countries51,0658668411,1081,2731,8432,4743,0553,2993,3364130
Sources: World Bank Debtor Reporting System; and IMF staff estimates.
Table 19.Multilateral Debt Service, 1980-941
Annual
Average
1980-8419851986198719881989199019911992199319942
(In millions of U.S. dollars)
Multilateral debt service
All countries39,80817,23224,87231,59034,36531,45534.49436,45736,86737,43239,315
Low-income rescheduling countries41,5921,5922,2812,0732,2722.2562,7182,9572,2372,2392,549
Heavily indebted poor countries51,4142,2473,2373,3653,7413,6014,0664,3213,5583,6974,046
(In percent of exports of goods and services)
Multilateral debt-service ratio
All countries31.83.24.85.25.14.34.24.14.14.03.9
Low-income rescheduling countries 47.37.310.49.29.79 110.311.88.99.59.5
Heavily indebted poor countries53.45.69.59.510.38 58.39.17.48.08.7
Memorandum items(In percent of exports of goods and services)
Multilateral debt
All countries317.227.234.335.330.728.929.430.130.030.730.7
Low-income rescheduling countries459.983.899.3118.2116.2115.3123.2139.0143.8162.4157.9
Heavily indebted poor countries541.364.091.0107.6107.497.397.4107.6110.213 9.7131.0
Sources: World Bank Debtor Reporting System; and IMF staff eslimates.
Table 20.Multilateral Debt by Institution, 1980-94
Annual Average
1980-841985-9419901991199219931994 1
(In millions of U.S. dollars)
World Bank47.0107.6141.0150.1151.7161.3174.8
IBRD30.775.395.9100.398.1103.0108.6
IDA16.332.245.149.853.658.366.1
Regional development banks211.928.345.351.355.762.168.3
AfDB 3/AfDF41.04.08.110.111.613.114.9
AsDB53.77.915.518.420.022.926.4
IDB 67.216.421.722.924.126.127.1
European institutions72.66.711.113.514.115.214.8
Others6.111.512.011.912.213.08.4
IMF24.938.634.738.138.338.942.9
Total92.6192.7244.0264.9271.9290.6309.2
(In percent of total)
World Bank50.855.857.856.755.855.556.5
IBRD33.239.139.337.936.135.435.1
IDA17.616.718.518.819.720.121.4
Regional development banks212.814.718.619.420.521.422.1
AfDB/AfDF1.12.13.33.84.34.54.8
AsDB4.04.16.46.97.47.98.5
IDB7.78.58.98.68.99.08.8
European institutions52.83.54.65.15.25.24.8
Others6.66.04.94.54.54.52.7
IMF26.920.114.214.414.113.413.9
Total100.0100.0100.0100.0100.0100.0100.0
Sources: World Bank Debtor Reporting System; and IMF staff estimates.
Table 21.Heavily Indebted Poor Countries: Structure of Multilateral Debt, 1985-94
MultilateralShares in Total Multialateral Debt Outstanding
DebtTotalWorld BankRegional Development banksOther multilateralIMF
OutstandingconcessionalIBRDIDANoncessionalConcessionalinstititionsTotalTotalOf which
19851994119851994 119851994 119851994 119851994 119851994 119851994 119851994 1concessional 2
(In millions of U.S. dollars)(In percent of total multilateral debt outstanding)
Angola281391273---361037223884---
Benin2418238997--52564-14232512599
Bolivia8062,37751632651227113033269-101111
Burkina Faso2829929194--53521211193222455
Burundi2619208896--536010315201610666
Cameroon7081,770502841393223618-2181542-
Central African Republic1636307695--39603122251282474
Chad1016549084--3951--262723161274
Congo342649382617181927153712481433-
Cote d’Ivoire1,8723,85910185244-15122-110103695
Equatorial Guinea271244997--12402249261014471616
Ethiopia6732,06786937-65672610225-1133
Ghana1,2273,248369110221642S3571572218
Guinea2881,347709114-405761031521121155
Guinea-Bissau1014478698--44448219222631311
Guyana360810497913582271123201920252216
Honduras1,1932,181404631217141215262813171251
Kenya1,8433,120318241162257151475281313
Lao People’s Democratic Republic765729798--3544--35441441683
Liberia550720272818211415118338746465
Madagascar6601,62871984148631461314152855
Mali4981,3208298--45582-142320102088
Mauritania37689160871411734396145032111010
Mozambique771,2024991--7594253417171-1818
Myanmar8111,33791100--51581-30414-14--
Nicaragua7421,254484922682031131323727-42
Niger3528756794--42655-101121172275
Nigeria1,4314.436811956124-28-135---
Rwanda24271399100--63671-1824157422
Sao Tome and Principe2215810098---30--38486222-11
Senegal8482,04452851122749510292415321512
Sierra Leone22548458964126383-6141616453030
Somalia5649147383--334611612332327182
Sudan1,7003,03855653-304.1-218221743323
Tanzania1,1072.7467396244517331410124588
Togo36973269997-44704-810178201111
Uganda7992.34749975-36689118125381616
Vietnam1654818141--3335---681595918
Yemen. Republic of6941,1849199--5066----5034---
Zaire1,4102,71741332648419188457188
Zambia1,5232,8651852247736371512165328-
Total (in millions of U.S. dollars)25,75960,81612,59242,4505,5107,1376,68826,6139665,9911,9127,4904,0356,2796,6437,3064,130
Share of total debt (in percent)497021122644410712161026127
Sources: World Bank Debtor Reporting System: and IMF staff estimates.
Table 22.Composition and Average Terms of Multilateral Debt by Major Institution, 1985-94
Average terms of New Commitments in 1993
Debt OutstadningGrant element of using
AmountShare of totaldiscount rate of 4
19943198519943InterestMaturityGrace10%CIRRs 5
(In millions of U.S. dollars)(In percent)(In percent)(In years)(In percent)
Concessional debt110,080100.0100.01.7932.08.766.459.5
IDA66,14154.560.10.7537.210.179.569.7
AsDB13,2165.412.01.3037.09.974.660.4
AfDF5,9592.15.40.7643.310.180.273.4
IDB5,0697.84,63.3923.56.246.937.1
European Investment Bank2,4021.32.24.871735.431.826.4
International Fund for Agricultural Development2,0321.51.81.8740.38.868.761.0
Arab Fund for Economic and
Social Development1,8491.91.74.0522.69.544.332.4
EC1,0961.91.03.4819.68.040.140.6
European Development Fund1,0851.61.01.0015.05.053.749,4
IBRD 67984.00.73.7717.65.339.523.9
OPEC 7 Special Fund7262.80.73.4215.34.637.927.6
Council of Europe7230.20.71.0010.06.047.642.4
Islamic Development Bank6160.80.62.3318.15.048.538.3
Other1,5878.71.4.1 7517.04.937.830.1
IMF (SAF/ESAF/Trust Fund)6,7886.46.20.5010.05.549.141.6
Nonconcessional debt199,114100.0100.07.4318.15.015.0
IBRD107,86545.854.27.4417.65.315.2-
IDB22,0488.311.17.9524.15.213.1-
AsDB13,1373.46.66.6121.44.421.5-
AfDB8,8001.04.49.4820.64.91.9-
European Investment Bank4.0321.32.07.3216.45.115.59.1
EC3,033-1.54.974.84.815.613.5
Council of Europe2,4141.11.27.2510.06.014.56.8
Central American Bank for Economic Integration1,0120.40.56.3511.03.011.34.8
Other6543.30.37.199.73.310.53.1
IMF General Resources Account36,12035.318.14.918.64.122.414.3
Sources: World Bank Debtor Reporting System: OECD Press Releases: Annual Reports of the World Bank. AfDB/AfDF, AsDB. and IDB: and IMF staff estimates.

In line with the definition used in the World Bank Debtor Reporting System, multilateral lending in this section refers to lending by international organizations, including the World Bank, regional development banks, and other multilateral and intergovernmental agencies. Lending by the IMF is also included. Lending by funds administered by an international organization on behalf of a single donor government is excluded. The statistical information used in the following sections is derived mostly from the World Bank Debtor Reporting System supplemented by IMF staff estimates. The data for 1994 are provisional estimates.

A group of 137 countries reporting to the World Bank Debtor Reporting System. The data are not consistent with those derived from OECD (DAC) sources and used in Section IV (see Box 11).

A group of 41 countries, composed of the 32 countries classified by the World Bank as severely indebted low-income countries (SILICs), seven rescheduling countries that have received concessional treatment from the Paris Club, and two IDA-only countries (see Table 16).

Countries that registered notable declines in net disbursements in 1993 include Bolivia, Cameroon, Chad, Cote d’lvoire, Honduras, Nicaragua, Senegal, Tanzania, and Uganda (Table 16).

A similar pattern occurred for the group of low-income rescheduling countries, most of which are included in the group of heavily indebted poor countries.

In addition to large rises in net disbursements in 1994 to Cameroon and Cote d’lvoire, there were also significant rises to Uganda, Vietnam, and Zambia (Table 16).

Medium- and long-term public and publicly guaranteed debt.

Based on World Bank Debtor Reporting System data, which do not fully cover Russian claims on developing countries. If Debtor Reporting System data on such claims are replaced by Russian creditor data, the share of multilateral debt in total debt would be 2 percentage points lower. See appendix III.

A similar pattern occurred for the low-income rescheduling countries.

The low-income rescheduling countries experienced a similar trend.

Loan disbursements under the SAF/ESAF reached $1.3 billion in 1994 compared with $0.4 billion in 1993. Nearly twice the number of countries received concessional lending from the IMF in 1994 as in 1993.

Recently, some of the major multilateral institutions, including the IBRD, Inter-American Development Bank (IDB), and Asian Development Bank (AsDB), have been offering a wider choice of loan terms, such as single-currency loans, to offer borrowers more flexibility to select terms that meet their needs and reduce their financial risk. Interest rates on single-currency loans are either fixed rates or floating rates based on London interbank offered rate (LIBOR).

This has caused problems for some countries; see appendix III.

Using commercial interest reference rates (CIRRs). See Table 22, footnote 5.

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