National debt of developing countries

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The national debt of developing countries differs from the national debt of developed economies in several categories: The public debt is often higher than in industrialized countries and it is predominantly denominated in foreign currency (mostly US dollars ). In addition, national bankruptcies are far more common in underdeveloped and developing economies .

Reasons for the high debt

The indebtedness of developed economies can be justified by public spending that exceeds income. In developing countries, on the other hand, there are the following reasons for government debt:

The national debt of many developing countries is traditionally high due to their extensive investments in the export-oriented sectors of agriculture and raw material extraction. These government expenditures are often justified with the comparative cost advantage that these countries want to achieve in these areas compared to global competitors. Contrary to what had been hoped, however, these investments did not lead to an increase in export income, especially in the 1970s and 1980s. Rather, the increasing international competition among raw material exporting countries led to a fall in world market prices in many industries. At the same time, high interest payments had to be made for the loans taken out as a result of the two oil crises , so that the expenses were often not profitable.

Furthermore, according to most economists , many developing countries suffer from inefficient lending. The economic theory assumes that investors invest their capital precisely where it brings the highest return; however, this assumption does not hold true in most developing countries. Untrained financial markets, corruption, bad planning and state interventionism in many cases lead to inefficient use of the capital raised. As a result, it is often not possible to earn the interest (which is anyway higher than in developed economies due to the general developing country surcharge). This leads to new borrowing and thus to a further growing debt level.

There is also a problem with the frequent issuance ( denomination ) of loans in other currencies, particularly in US dollars. For example, while Germany's national debt in foreign currency was forbidden until recently, many developing countries have no choice but to denominate their loans in dollars due to the pressure of creditors. In doing so, the creditors want to avoid the additional risk of currency devaluation. For the borrowing developing countries, however, this means that a devaluation of their own currency is tantamount to a sharp increase in debt (expressed in domestic currency).

Another problem is the often too low savings rate in developing countries. Because of this, investments can often only be financed through the inflow of foreign capital.

List of external debts of selected countries by creditors (2003)

Legend:
International Bank for Reconstruction and Development and IDA are part of the World Bank Group ; AFDB and ADF are part of the African Development Bank Group ; IMF: International Monetary Fund
empty field : corresponds to zero; Green field : these debts are canceled (see below)
External debt Share of total debt in%
country US $ million total % GDP US $ p. E. * World bank IMF AFDB group multilateral bilateral private 1 due at short notice 1 2
IBRD IDA ADB ADF
Ethiopia 6522 107.6 95 42 2 2 11 3 35 2 1
Benin 1843 68.4 270 35 4th 1 25th 29 4th
Bolivia 4739 59.1 535 29 4th 40 4th 16 8th
Burkina Faso 1845 44.1 155 47 7th 2 32 10 4th
Ghana 7926 103.5 395 50 6th 1 5 * 3 * 19th 7th 9
Guyana 1447 195.2 1875 16 7th 38 27 4th 9
Honduras 5598 80.2 790 2 20th 3 30th 27 4th 9
Madagascar 4590 83.8 270 39 4th 6 * 0 * 44 2 5
Mali 2834 84.8 245 40 6th 14th 8th 27 5
Mauritania 2362 209.5 860 27 4th 2 * 9 * 18 * 32 7th
Mozambique 3 4756 132.2 255 21 * 4 * 8th* 3 * 22 * 32 * 11 *
Nicaragua 6829 166.2 1225 15th 3 27 41 7th 8th
Niger 1797 82.8 155 48 6th 9 11 21st 3 2
Rwanda 1540 91.5 180 59 6th 15 * 8th* 10 2
Zambia 5969 161.5 580 36 17th 1 4th 4th 33 2 2
Senegal 4167 64.1 410 43 6th 2 * 6 * 8th* 29 1 4th
Tanzania 7502 74.0 205 46 6th 7 * 3 * 25th 1 11
Uganda 3938 62.5 150 52 5 10 27 5 1
India 4 115.277 19.2 105 4th 19th 3 19th 51 4th

Outstanding foreign currency loans to foreign creditors were paid out. Status: end of 2003 (Ethiopia, Benin, Mali, Mozambique: end of 2002).

Remarks

1 These figures also include private debtors
2 includes loans with an original term of up to one year and overdue loans
3 contradicting information from the source (World Bank)
4 not affected by debt relief (see below)
* Estimate
Swell:

Debt relief

Unlike previous releases was announced on 22 December 2005, that the International Monetary Fund (IMF) 19 of the 20 poorest countries in the world whose entire debt to the financial institution as of January 1 issue is. That was decided by the executive directors of the IMF in Washington. The decree is worth $ 3.3 billion.

As it became known on June 11, 2005, the finance ministers of the seven leading industrial countries and Russia (G8) agreed on debt relief for the world's poorest countries at their meeting in London.

18 countries are to be immediately canceled all debts to IDA, IMF, and ADF:

Ethiopia , Bolivia , Ghana , Guyana , Honduras , Madagascar , Mauritania , Mozambique , Nicaragua , Rwanda , Zambia , Tanzania and Uganda , as well as the euro-bound CFA countries Benin , Burkina Faso , Mali , Niger and Senegal , should have debts in the amount of more than $ 40 billion will be waived immediately. These countries have reached the completion point of the HIPC (Heavily Indebted Poor Country , dt. Highly indebted developing countries) initiative.

Probably (12 to 18 months later) nine more states qualified for such debt cancellation:

the Democratic Republic of the Congo , Gambia , Guinea , Malawi , São Tomé and Príncipe , Sierra Leone and Guinea-Bissau , as well as the euro-bound CFA countries Cameroon and Chad .

This is set to bring the aforementioned amount to around $ 48 billion. These states have reached the decision point of the HIPC initiative and were in an interim period. Their debt services at IDA and IMF (ADF?) Are temporarily suspended.

Eleven states could qualify in the future:

Burundi , Laos , Liberia , Myanmar (Burma), Somalia , Sudan , as well as the euro-bound CFA countries Ivory Coast (Côte d'Ivoire), the Comoros , the Republic of Congo , Togo and the Central African Republic .

That would be about another $ 7 billion.

See also

swell

  1. ↑ SM Ali Abbas, Jakob E. Christensen: The Role of Domestic Debt Markets in Economic Growth. An Empirical Investigation for Low-income Countries and Emerging Markets. (= IMF Working Paper. WP / 07/127). International Monetary Fund, Washington DC 2007, p. 31 ( PDF file; 0.8 MB )
  2. ^ The World Bank Group, Country at a Glance Tables
  3. ^ African Development Bank Annual Report 2002
  4. ↑ Original text of the declaration
  5. ^ World Bank Debt Department

literature

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