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External Debt ± Inter-country Comparisons

Presented by

Tarun Das Economic Adviser, Ministry of Finance, India and Resource Person for UNITAR

UNITAR Lecture-2

External Debt - Tarun Das

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1.1 International Comparison of top 10 debtor countries in 2003
Country and Rank in Total external Share of terms of stock of debt concessional external debt (US$ billion) debt (per cent) 1. Brazil 235 1 2. China 194 17 3. Russian Federation 176 1 4. Argentina 166 1 5. Turkey 146 4 6. Mexico 140 1 7. Indonesia 134 27 8. India 114 38 9. Poland 95 7 10.Philippines 63 23
UNITAR Lecture-2 External Debt - Tarun Das

Debt to GNP ratio (per cent) 30 15 50 104 77 23 80 22 40 77
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1.2 International Comparison of top 10 debtor countries in 2003
Country and Rank in terms of stock of external debt 1. Brazil 2. China 3. Russian Federation 4. Argentina 5. Turkey 6. Mexico 7. Indonesia 8. India 9. Poland 10.Philippines
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Ratio of short term debt to (per cent) Total debt Foreign exch. 8.3 39.8 32.7 17.5 17.6 39.3 13.8 162.4 15.8 64.7 6.6 15.5 17.0 63.2 4.2 4.6 20.5 57.4 9.9 39.0
External Debt - Tarun Das

Debt service ratio (per cent) 63.8 7.3 11.8 37.9 38.5 20.9 26.0 18.1 25.1 22.1
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1.3 Indebtedness and Income Group Classification
Severely Indebted: Either PV/XGS > 220% Or PV/GNP > 80%
Low Income: PC-GNP less than $765 Middle Income : PC-GNP between $766 and $9385

Moderately Indebted: Either 132% <PV/XGS< 220% or 48% <PV/GNP< 80%

Low Income: PC-GNP less than $765 Middle Income : PC-GNP between $766 and $9385

Less Indebted: Both PV/XGS< 132% and PV/GNP< 48%
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Low Income: PC-GNP less than $765 Middle Income : PC-GNP between $766 and $9385
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1.4 Selected countries in Asia
Severely Indebted low Income (SILI) countries
Bhutan Kyrgyz Rep Lao PDR Myanmar Tajikistan UNITAR Lecture-2

Severely Indebted middle Income (SIMI) countries
Indonesia Kazakhstan Maldives Samoa Turkey External Debt - Tarun Das

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1.5 Selected countries in Asia
Moderately Indebted low Income (MILI) countries
Cambodia Mongolia Pakistan PN Guinea Solomon Island UNITAR Lecture-2 Uzbekistan

Moderately Indebted middle Income (MIMI) countries
Malaysia Philippines Russian Fed Sri Lanka Turkmenistan
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1.6 Selected countries in Asia
Less Indebted low Income (MILI) countries Less Indebted middle Income (MIMI) countries

Bangladesh India Nepal Vietnam

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Armenia Azerbaijan China Fiji Iran Ism Rep Thailand Tonga External Debt -Vanuatu Tarun Das

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1.7 International Comparison of top 10 debtor countries in 2003
Country and Rank in Present Value PV/ GNP PV to terms of present of external debt ratio exports value of external debt ( S$ billion) (per cent) ratio (%) 1. Brazil 254.1 54 323 2. China 188.5 15 48 3. Russian Federation 186.5 117 531 4. Argentina 184.2 52 135 5. Turkey 157.1 25 83 6. Mexico 153.0 81 243 7. Indonesia 136.9 82 200 8. India 100.3 19 106 9. Poland 93.5 48 147 UNITAR Lecture-2 Debt 10.Philippines 65.4 External80 - Tarun Das 147 Indebtedness and income Classification Severe/ Middle Less/ Middle Severe/ Middle Moderate/ Middle Less / Middle Severe/ Middle Severe/ Middle Less/ Low Moderate/ Middle Moderate/ Middle

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1.8 International Comparison of South Asian countries in 2003
Country and Rank in Present Value PV/ GNP PV to terms of present of external debt ratio exports value of external debt (US$ billion) (per cent) ratio (%) 1. India 100.3 19 106 2. Pakistan 29.7 41 189 3. Bangladesh 12.8 25 128 4. Srl Lanka 8.4 51 110 5. Nepal 2.1 38 131 6. Bhutan 0.4 74 252 7. Maldives 0.2 35 41 Indebtedness and income Classification Less/ Low Moderate/ Low Less/ Low Moderate/ Middle Less / Low Severe/ Low Severe/ Middle

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1.9 International Comparison of Pacific countries in 2003
Country nd nk in Present V lue PV/ G P PV to terms of resent of external debt ratio exports value of external debt 1. iji 2.Papua 3. amoa
4.Solomon Island
billion)

Guinea

5. onga 6. Vanuatu

. 2.5 0.4 0.2 0.084 0.095

Indebtedness and income per cent) ratio %) Classification 15 24 Less / Low 80 104 Moderate/ Low 122 209 Severe/ Medium 60 176 Moderate/ Low 40 74 Less / Medium 28 46 Less/ Medium

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1.10 Selected Asian countries
PV PV XGS PV GNI $Bln (%) (%) 1 Armenia 0.7 85 29 2 Azerbaijan 1.4 47 23 3 Cambodia 2.7 107 70 8 4 Iran 10 30 95 5 Kazakhstan 23 183
UNITAR Lecture-2 External Debt - Tarun Das

Country

LIMI LIMI MILI LIMI SIMI
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1.11 Selected Asian countries
PV PV XGS PV GNI ($ Bln) (%) (%) 98 1 Kyrgyz Rep 1.6 221 2 Lao PDR 2 356 91 56 3 Malaysia 50 45 4 Mongolia 1 149 95 « 5 Myanmar 6 187
UNITAR Lecture-2 External Debt - Tarun Das

Country

SILI SILI MIMI MILI MILI
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1.12 Selected Asian countries
Country 1 2 3 4 5 PV PV XGS PV GNI ($ Bln) (%) (%) 77 Tajikistan 1 112 41 Thailand 51 59 Turkmenistan* « « « Uzbekistan 5 142 47 39 Vietnam 14 67
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SILI LIMI MIMI MILI LILI
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1.13-A IndonesiaExternal Debt Indicators ($ BLN)
Year
EDT LTD PG Use of IMF ce Short-term d GNI XGS 1980 20.9 18.2 15 0 2.8 74.8 « 1990 69.9 58.2 48.0 0.5 11.1 109.2 29.9 2000 144.4 110.9 69.8 10.8 22.6 139.3 74.3 2003 134.4 101.2 73.4 10.3 22.9 199 71.1

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1.13-B IndonesiaExternal Debt Indicators ($ BLN)
1980 TDS
Interest

1990 9.9 4.0 6.0 33.1

2000 16.7 7.4 9.3 66.9 29.4 8.0

2003 18.5 4.2 14.3 63.9 36.3 7.5
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3.1 1.5 1.6

Pr.Rep MGS RES BCA
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8.7 -3.0
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1.13-C IndonesiaExternal Debt Indicators (%)
EDT/ XGS EDT/ GNI TDS/ XGS INT/ XGS INT/ GNI RES/ EDT
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1990 « 28 « « 1.9 32.5

1999 234 64 33 13 3.6 12.4
External Debt - Tarun Das

2000 194 104 23 10 5.3 20.3

2003 190 68 26 4 2.3 27.8
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1.13-D IndonesiaExternal Debt Indicators

1990 RES/ EDT RES/ MGS (m Short/EDT Conc/ EDT Multi/EDT
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1999 12.4 3.1 15.9 26.4 20.4
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2000 20.3 5.3 15.7 21 13.8

2003 27.8 6.7 17.8 27.4 14.1
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32.5 « 13.3 36.4 8.8

2 International best practices
1 2 3 4 5 6 New Zealand - The New Zealand Debt Management Office (NZDMO Australia- The Australian Office of Financial Management (AOFM) IrelandThe National Treasury Management Agency (NTMA) The Maastricht Treaty of the European Union Fund-Bank Conditionality Heavily Indebted Poor Country (HIPC) Initiatives
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3.1 Debt management objectives and priorities (% of respondents)

(a) Minimise financial costs and risks38% (b) Funding management-26% © Management of debt- 15% (d) Development of financial markets9% (e) Others 13%
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3.2. Establishment of benchmarks for risk management (% of respondents) 1.Countries establishing guidelines for risk management 45% 2. Countries establishing benchmarks for foreign currency debt 24% 3.Countries establishing benchmarks for portfolio performance 21% 4. Countries establishing benchmarks for domestic currency debt 13%
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3.3 Risk management guidelines
(a) Limit currency risk 35%

(b) Avoid excessive short-term debt / to smooth maturity profile 29% (c) Debt in least volatile currency 24% (d) Limit on debt with floating interest rate 18% (e) Debt matching reserves 12% (f) Others 18%
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Not using any analytical techniques ± 32% (b) Value-at-Risk (VAR)/ Cost-atRisk (CAR) - 23% (c) Debt sustainability indicators16% (d) Others ± 29%
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3.4. Analytical techniques for undertaking risk analysis (%)
(a)

3.5 Constraints for establishing benchmarks
5. ( ) ( ) L ck f t t L ck f t x rtis (c) cc ss t fi ci l rk ts ( ) L ck f t it ri ( ) iffic lt c ic vir (f) th rs licy 2 t 2 1 10 10 21

t

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3.6 Sovereign Debt Management
6. Use of derivatives to hedge currency and interest rate risks ( Currency swaps 31% ( Interest rate swaps 24% ( Use of exchange commodity futures and options 7% 7. Constraints for using derivatives ( Lack of technical knowledge 71% ( Undeveloped financial markets 17% ( Legal 12% UNITAR Lecture-2 constraints External Debt - Tarun Das

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3.8 Sovereign Debt Management
8. Institutions managing the foreign currency debt ( Ministry of Finance 51% ( Jointly by the Ministry of Finance and the Central Bank 3 % ( Central Bank 11% ( Independent Debt Office 95
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3.9 Sovereign Debt Management
9. Coordination of both public and public debt ( Ministry of Finance 35 ( Jointly by the Ministry of Finance (MOF) and the Central Bank (CB) 24 ( Partly by MOF and partly and independently by the CB 24 ( Debt Management Committee 18
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3.10. Highest authority for approval of debt
( ( ( ( ( Authority Dom.debt Ext.debt Finance minister/ Governor of the Central Bank 72% 49% Parliament 6% 21% Interministerial board 8% 12% President/ Prime Minister 6% 9% DG of independent authority 8% 9%
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3.11 Average time taken for approval of external debt
( One day or less 10% ( Less than a week 13% ( More than a week, but less than three months 65% ( More than three months 13%
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3. 12. Management of Contingent liabilities
( Subnational entities are allowed to raise their own funding abroad 69% ( Central govt provides explicit guarantees for IBRD loans 68% ( Central govt bears fully the exchange rate risk for IBRD loans 41% ( Central govt shares partially the exchange rate risk 11%
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3.13. Efficiency of Middle Office (% of respondent)
( Use of Market Information system (MIS) 76% ( Access to internet 91% ( No Middle Office Unit 43% ( Distinct Middle Office Unit 43% ( Middle Office placed under the direction of the Front Office 3%
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3.14. Main constraints for external debt management
( Lack of proper organisational structure 31% ( Macroeconomic risk 14% ( Lack of technical staff in the middle office 12% ( Lack of technical staff in the back office 6% ( Lack of legal framework 6% ( Limited local debt market 6%
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Thank you Have a Good Day

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