Debt Sustainability and the Ongoing Financial Crisis : The Case of IDA-Only African Countries

The ongoing financial crisis has raised concerns in many circles about a potential future wave of sovereign defaults spreading among developing countries and, therefore, the need for additional rounds of debt relief in poor indebted countries. This paper addresses this issue for a group of 31 Intern...

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Main Authors:	Hernandez, Leonardo, Gamarra, Boris
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Business Fluctuations Cycles E320 Financial Markets and the Macroeconomy E440 International Lending and Debt Problems F340 Financial Crises G010 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 International Linkages to Development Role of International Organizations O190
Online Access:	http://hdl.handle.net/10986/5833

id	okr-10986-5833
recordtype	oai_dc
spelling	okr-10986-58332021-04-23T14:02:23Z Debt Sustainability and the Ongoing Financial Crisis : The Case of IDA-Only African Countries Hernandez, Leonardo Gamarra, Boris Business Fluctuations Cycles E320 Financial Markets and the Macroeconomy E440 International Lending and Debt Problems F340 Financial Crises G010 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 International Linkages to Development Role of International Organizations O190 The ongoing financial crisis has raised concerns in many circles about a potential future wave of sovereign defaults spreading among developing countries and, therefore, the need for additional rounds of debt relief in poor indebted countries. This paper addresses this issue for a group of 31 International Development Association (IDA)-only African countries, which are in a fragile debt situation. Using the most recent debt sustainability analyses (DSAs) undertaken for these countries by the World Bank and the IMF, this paper studies the potential adverse effect of the ongoing financial crisis on the countries' debt burden indicators, as a function of the depth and length of the crisis. The latter is measured by the fall and the duration of such fall in exports revenues, and by the terms at which each country can obtain financing to muddle through the crisis period. The analysis underscores the importance of concessional financing for these countries, especially if the crisis proves to be a protracted one. This, because the likelihood of countries being able to muddle through the crisis without defaulting on their external debt decreases with the hardening of the financial conditions faced by them--alternatively, the size of the downsizing in domestic (fiscal) expenditures needed to ensure the service of their foreign debts increases with the tightening of financial conditions. 2012-03-30T07:34:46Z 2012-03-30T07:34:46Z 2010 Journal Article African Development Review/Revue Africaine de Developpement 10176772 http://hdl.handle.net/10986/5833 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Business Fluctuations Cycles E320 Financial Markets and the Macroeconomy E440 International Lending and Debt Problems F340 Financial Crises G010 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 International Linkages to Development Role of International Organizations O190
spellingShingle	Business Fluctuations Cycles E320 Financial Markets and the Macroeconomy E440 International Lending and Debt Problems F340 Financial Crises G010 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 International Linkages to Development Role of International Organizations O190 Hernandez, Leonardo Gamarra, Boris Debt Sustainability and the Ongoing Financial Crisis : The Case of IDA-Only African Countries
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	The ongoing financial crisis has raised concerns in many circles about a potential future wave of sovereign defaults spreading among developing countries and, therefore, the need for additional rounds of debt relief in poor indebted countries. This paper addresses this issue for a group of 31 International Development Association (IDA)-only African countries, which are in a fragile debt situation. Using the most recent debt sustainability analyses (DSAs) undertaken for these countries by the World Bank and the IMF, this paper studies the potential adverse effect of the ongoing financial crisis on the countries' debt burden indicators, as a function of the depth and length of the crisis. The latter is measured by the fall and the duration of such fall in exports revenues, and by the terms at which each country can obtain financing to muddle through the crisis period. The analysis underscores the importance of concessional financing for these countries, especially if the crisis proves to be a protracted one. This, because the likelihood of countries being able to muddle through the crisis without defaulting on their external debt decreases with the hardening of the financial conditions faced by them--alternatively, the size of the downsizing in domestic (fiscal) expenditures needed to ensure the service of their foreign debts increases with the tightening of financial conditions.
format	Journal Article
author	Hernandez, Leonardo Gamarra, Boris
author_facet	Hernandez, Leonardo Gamarra, Boris
author_sort	Hernandez, Leonardo
title	Debt Sustainability and the Ongoing Financial Crisis : The Case of IDA-Only African Countries
title_short	Debt Sustainability and the Ongoing Financial Crisis : The Case of IDA-Only African Countries
title_full	Debt Sustainability and the Ongoing Financial Crisis : The Case of IDA-Only African Countries
title_fullStr	Debt Sustainability and the Ongoing Financial Crisis : The Case of IDA-Only African Countries
title_full_unstemmed	Debt Sustainability and the Ongoing Financial Crisis : The Case of IDA-Only African Countries
title_sort	debt sustainability and the ongoing financial crisis : the case of ida-only african countries
publishDate	2012
url	http://hdl.handle.net/10986/5833
_version_	1764396480875986944

Debt Sustainability and the Ongoing Financial Crisis : The Case of IDA-Only African Countries

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