Debt Build-up in Frontier Low-Income Developing Countries (LIDCs) since 2012: Global or Country-specific Factors and Way Forward?

Constance de Soyres, Anna Rogantini Picco and Randa Sab

No 2019/037, IMF Working Papers from International Monetary Fund

Abstract: This paper focuses on the debt build-up that frontier low-income developing countries (LIDCs) have faced since 2012. First, it documents a 20-percentage point increase in the external and government debt-to-GDP ratios, a composition shift toward higher non-concessional debt, and a rise in interest rate payments. Second, using panel regressions, it shows that while both global and country-specific factors are correlated with debt-to-GDP ratios over 1998–2016, global factors dominate for the period 2012–16. Third, through a small open-economy model, it shows that the projected tightening in global financial conditions would reduce debt-to-GDP ratios by less than the increase associated with the expected rise in investment.

Keywords: WP; debt-to-GDP ratio; price index; open economy; Debt build-up; Frontier LIDCs; global and country-specific factors; Gov. debt-to-GDP; adjustment cost; percent GDP; Commodity price indexes; Fiscal stance; Debt relief; Global (search for similar items in EconPapers)
Pages: 40
Date: 2019-02-22
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (3)

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