public debt lecture-2 by tarun das

8/14/2019 Public Debt Lecture-2 by Tarun Das

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UNITAR Lecture-2 External Debt - Tarun Das 1

External Debt

Inter-country Comparisons

P r e s e n t e d b y

Dr Tarun Das

Economic Adviser

Ministry of Finance


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1.1 International Comparisonof top 10 debtor countries in

2003Country and Rank in Total external Share of Debt to GNP

terms of stock of debt concessional ratio

external debt (US$ billion) debt (per cent) (per cent)

1. Brazil 235 1 30

2. China 194 17 153. Russian Federation 176 1 50

4. Argentina 166 1 104

5. Turkey 146 4 77

6. Mexico 140 1 23

7. Indonesia 134 27 80

8. India 114 38 229. Poland 95 7 40

10.Philippines 63 23 77


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1.2International Comparisonof top 10 debtor countries in

2003Country and Rank in Ratio of short term Debt service

terms of stock of debt to (per cent) ratio

external debt Total debt Foreign exch. (per cent)

1. Brazil 8.3 39.8 63.8

2. China 32.7 17.5 7.33. Russian Federation 17.6 39.3 11.8

4. Argentina 13.8 162.4 37.9

5. Turkey 15.8 64.7 38.5

6. Mexico 6.6 15.5 20.9

7. Indonesia 17.0 63.2 26.0

8. India 4.2 4.6 18.19. Poland 20.5 57.4 25.1

10.Philippines 9.9 39.0 22.1


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. Income

Group ClassificationSeverely 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%


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. e ec e coun r es nAsia

SeverelyIndebted lowIncome (SILI)

countries

SeverelyIndebted middleIncome (SIMI)

countries

Bhutan

Kyrgyz RepLao PDR

Myanmar

Tajikistan

Indonesia

KazakhstanMaldives

Samoa

Turkey

1 5 S


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1.5 Se ecte countr es nAsia

ModeratelyIndebted lowIncome (MILI)countries

ModeratelyIndebted middleIncome (MIMI)countries

Cambodia

Mongolia

Pakistan

PN Guinea

Solomon Island

Uzbekistan

Malaysia

Philippines

Russian Fed

Sri Lanka

Turkmenistan


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.Asia

Less Indebted low

Income (MILI)countries

Less Indebted middle

Income (MIMI)countries

BangladeshIndia

Nepal

Vietnam

ArmeniaAzerbaijan

China

Fiji

Iran Ism Rep

Thailand

Tonga

Vanuatu

1 7 I t ti l C i


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1.7International Comparisonof top 10 debtor countries in2003

C o u n t r y a n d R a n k i nP r e s e n t V a l u eP V / G N PP V t o I n d e b t e d n e st e r m s o f p r e s e n to f e x t e r n a l d e b tr a t i o e x p o r t s a n d i n c o m e

v a l u e o f e x t e r n a l d e b t( U S $ b i l l i o n )( p e r c e n t )r a t i o ( % ) C l a s s i f i c a t i o

1 . B r a z i l 2 5 4 . 1 5 4 3 2 3 S e v e r e / M i d d

2 . C h i n a 1 8 8 . 5 1 5 4 8 L e s s / M i d d l e

3 . R u s s i a n F e d e r a t i o n1 8 6 . 5 1 1 7 5 3 1 S e v e r e / M i d d4 . A r g e n t i n a 1 8 4 . 2 5 2 1 3 5 M o d e r a t e / M i

5 . T u r k e y 1 5 7 . 1 2 5 8 3 L e s s / M i d d l

6 . M e x i c o 1 5 3 . 0 8 1 2 4 3 S e v e r e / M i d d

7 . I n d o n e s i a 1 3 6 . 9 8 2 2 0 0 S e v e r e / M i d d

8 . I n d i a 1 0 0 . 3 1 9 1 0 6 L e s s / L o w

9 . P o l a n d 9 3 . 5 4 8 1 4 7 M o d e r a t e / M i

1 0 . P h i l i p p i n e s 6 5 . 4 8 0 1 4 7 M o d e r a t e / M i

1 8 I t ti l C i


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1.8 International Comparisonof South Asian countries in2003C o u n try a n d R a n k inP r e s e n t V a lu eP V / G N PP V to In d e b te d n e s s

te r m s o f p r e s e n tf e x te rn a l r a tio e x p o rts a n d in c o m e

v a l u e o f e x t e rn a l d e b t( U S $ b i llio n )(p e r c ra t io ( % ) C la s s if ic a tio n

1 . In d ia 1 0 0 .3 1 9 1 0 6 L e s s / L o w

2 . P a k is ta n 2 9 .7 4 1 1 8 9 M o d e ra te / L o

3 . B a n g la d e s h 1 2 .8 2 5 1 2 8 L e s s / L o w

4 . S r l L a n k a 8 .4 5 1 1 1 0 M o d e r a te / M id5 . N e p a l 2 .1 3 8 1 3 1 L e s s / L o w

6 . B h u ta n 0 .4 7 4 2 5 2 S e v e r e / L o w

7 . M a ld iv e s 0 .2 3 5 4 1 S e v e r e / M id d l


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1.9 International Comparisonof Pacific countries in 2003

ountry and Rank i Present Value PV/ GNP PV to Indebtedness

terms of present of external debt ratio exports and income

alue of external de (US$ billion) (per cenratio (%) Classification

1. Fiji 0.3 15 24 Less / Low

2.Papua NGuine 2.5 80 104 Moderate/ Low

3.Samoa 0.4 122 209 Severe/ Medium

4.Solomon Island 0.2 60 176 Moderate/ Low

5.Tonga 0.084 40 74 Less / Medium6.Vanuatu 0.095 28 46 Less/ Medium


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1.10Selected Asian

countriesCountry PV PV/XGS PV/GNI

$Bln (%) (%)

1 Armenia 0.7 85 29 LIMI2 Azerbaijan 1.4 47 23 LIMI

3 Cambodia 2.7 107 70 MILI

4 Iran 10 30 8 LIMI5 Kazakhstan 23 183 95 SIMI


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1.11Selected Asian


($ Bln)(%) (%)

1 Kyrgyz Rep 1.6 221 98 SILI2 Lao PDR 2 356 91 SILI

3 Malaysia 50 45 56 MIMI

4 Mongolia 1 149 95 MILI5 Myanmar 6 187 MILI


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1.12Selected Asian


($ Bln) (%) (%)

1 Tajikistan 1 112 77 SILI2 Thailand 51 59 41 LIMI

3 Turkmenistan* MIMI

4 Uzbekistan 5 142 47 MILI5 Vietnam 14 67 39 LILI


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1.13-A Indonesia-External Debt Indicators ($ BLN)

Year 1980 1990 2000 2003

EDT 20.9 69.9 144.4 134.4

LTD 18.2 58.2 110.9 101.2

PG 15 48.0 69.8 73.4

Use of IMF 0 0.5 10.8 10.3

Short-term 2.8 11.1 22.6 22.9

GNI 74.8 109.2139.3

199XGS 29.9 74.3 71.1


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1.13-B Indonesia-External Debt Indicators ($ BLN)

1980 1990 2000 2003TDS 3.1 9.9 16.7 18.5

Interest 1.5 4.0 7.4 4.2

Pr.Rep 1.6 6.0 9.3 14.3

MGS 33.1 66.9 63.9

RES 6.8 8.7 29.4 36.3

BCA -3.0 8.0 7.5


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1.13-C Indonesia-

External Debt Indicators (%)

1 9 9 0 1 9 9 9 2 0 0 0 2 0 0 3

ED T / X GS 2 3 4 1 9 4 1 9 0

ED T / GN I 2 8 6 4 1 0 4 6 8

T D S / X GS 3 3 2 3 2 6IN T / X G S 1 3 1 0 4

IN T / G N I 1 .9 3 .6 5 .3 2 .3

R E S / E D T 3 2 .5 1 2 .4 2 0 . 3 2 7 . 8


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1.13-D Indonesia-

External Debt Indicators 1 9 9 0 1 9 9 9

2 0 0 0 2 0 0 3

R E S / E D T 3 2 .5 1 2 .4 2 0 .3 2 7 .8

R E S / M 3 .1 5 . 3 6 . 7

S h o r t /E D T1 3 .3 1 5 .9 1 5 .7 1 7 .8

C o n c / ED T3 6 .4 2 6 .4 2 1 2 7 .4

M u lt i/E D T 8 .8 2 0 .4 1 3 .8 1 4 .1


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2 International bestpractices

1New Zealand -The New ZealandDebt Management Office (NZDMO

2 Australia- The Australian Office ofFinancial Management (AOFM)

3 Ireland- The National TreasurManagement Agency (NTMA)

4 The Maastricht Treaty of theEuropean Union

5 Fund-Bank Conditionality6 Heavily Indebted Poor Country

(HIPC) Initiatives


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3.1 Debt management objectivesand priorities(% of

respondents)

(a) Minimise financial costs and risks- 38%

(b) Funding management- 26%

Management of debt- 15%

(d) Development of financial markets- 9%

(e) Others 13%


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3.2. Establishment ofbenchmarks for risk

management(% of respondents)

1.Countries establishing guidelines forrisk management 45%

2. Countries establishing benchmarksfor foreign currency debt 24%

3.Countries establishing benchmarks forportfolio performance 21%

4. Countries establishing benchmarksfor domestic currency debt 13%


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3.3 Risk managementguidelines

(a) Limit currency risk 35%

(b) Avoid excessive short-term debt / tosmooth maturity profile 29%

(c) Debt in least volatile currency 24%

(d) Limit on debt with floating interest rate18%

(e) Debt matching reserves 12%

(f) Others 18%

na yt ca


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. . na yt catechniques for

undertaking riskanalysis (%)(a) Not using any analytical

techniques 32%

(b) Value-at-Risk (VAR)/ Cost-at-Risk (CAR) - 23%

(c) Debt sustainability indicators-

16%(d) Others 29%


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3.5 Constraints forestablishingbenchmarks5.

(a) Lack of debt management policy 23%

(b) Lack of debt management

expertise

23%

(c) No access to financial markets 13%

(d) Lack of debt monitoring 10%

(e) Difficult economic environment 10%

(f) Others 21%


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3.6 Sovereign Debt

Management6. 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 constraints 12%


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3.8 Sovereign Debt

Management8. Institutions managing the

foreign currency debt

( Ministry of Finance 51%(Jointly by the Ministry of Finance

and the Central Bank 30%

( Central Bank 11%( Independent Debt Office 95


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3.9 Sovereign Debt

Management9. 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 authorityfor approval of debt

Authority Dom.debtExt.debt

( Finance minister/ Governor of the CentralBank 72% 49%

( Parliament 6% 21%( Interministerial board 8% 12%

( President/ Prime Minister6% 9%

( DG of independent authority 8% 9%


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3.11 Average time takenfor 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 guaranteesfor IBRD loans 68%

( Central govt bears fully the exchange raterisk for IBRD loans41%

( Central govt shares partially the exchangerate risk11%


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3.13. Efficiency ofMiddle 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 forexternal 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

public debt lecture-2 by tarun das

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