Paper
The importance of good data in helping low- and middle-income countries to manage debt during and after the COVID-19 pandemic
Published Jun 15, 2021 ·
World Development Report 2021: Data for Better Lives
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Abstract
International Monetary Fund (IMF) have proposed the DSSI.2 In managing current and future debt, governments and partners will need to improve the coverage, quality, timeliness, granularity, and transparency of debt data.3 This effort requires investing in both the data themselves and in the systems for collecting, managing, analyzing, and reporting data, especially for countries where the risks are greatest. The World Bank and IMF have offered the following recommendations to the G-20:4 Data on public debt remain opaque in some countries, potentially enabling governments to overborrow and hide debts from their citizens and creditors, at least for some period (see the example of Mozambique from chapter 1). This vulnerability is compounded by the high (reported) debt levels of lower-income countries at the outset of the COVID-19 crisis and the changing composition of private creditors and debt instruments. In 2019 almost half of all low-income countries were either in debt distress or at high risk of it. As the pandemic pushes as many as 150 million people into extreme poverty,1 countries may need to take on substantial additional debt, which could result in large debt overhangs that could take years to manage. The proliferation of complex debt instruments may make it easier for governments to obscure their debt position. Moreover, the composition of creditors is changing: China, the largest creditor, increased its share of the combined debt owed by Debt Service Suspension Initiative (DSSI)-eligible countries to G-20 countries from 38 percent to 57 percent between 2013 and end-2019 (figure S1.2.1). These changes could create new exposures, especially regarding access to future debt. While most lower-income countries owe a relatively small share of their external public debt to private creditors, some countries, including Chad, Côte d’Ivoire, Ghana, Saint Lucia, and Zambia, owe as much as 50–60 percent to private creditors. Private sector participation in achieving a sustainable debt trajectory will become increasingly critical for many countries. Recognizing the pressing need to manage the debt burden of low-income countries, the World Bank and Figure S1.2.1 In six years, the composition of debt has shifted dramatically
IMF have recommended improving debt data coverage, quality, timeliness, granularity, and transparency in low- and middle-income countries to better manage debt during and after the COVID-19 pandemic.
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