Debt indicators

The macroeconomic aggregates and debt data provided in the tables are used to generate ratios that analysts use to assess the external situations of developing countries. Different analysts give different weights to these indicators, but no single indicator or set of indicators can substitute for a thorough analysis of the overall situation of an economy. The advantage of the indicators in Global Development Finance is that they are calculated from standardized data series that are compiled on a consistent basis by the World Bank and the IMF. The ratios offer various measures of the cost of, or capacity for, servicing debt in terms of the foreign exchange or output forgone. The following ratios are provided based on total external debt:

EDT/XGS is total external debt to exports of goods and services (including workers’ remittances).

EDT/GNP is total external debt to gross national product.

TDS/XGS, also called the debt service ratio, is total debt service to exports of goods and services (including workers’ remittances).

INT/XGS, also called the interest service ratio, is total interest payments to exports of goods and services (including workers’ remittances).

INT/GNP is total interest payments to gross national product.

RES/EDT is international reserves to total external debt.

RES/MGS is international reserves to imports of goods and services.

Short-term/EDT is short-term debt to total external debt.

Concessional/EDT is concessional debt to total external debt.

Multilateral/EDT is multilateral debt to total external debt.

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Long-term debt

Data on long-term debt include eight main elements:

DEBT OUTSTANDING AND DISBURSED is the total outstanding debt at year end.

DISBURSEMENTS are drawings on loan commitments by the borrower during the year.

PRINCIPAL REPAYMENTS are amounts paid by the borrower during the year.

NET FLOWS received by the borrower during the year are disbursements minus principal repayments.

INTEREST PAYMENTS are amounts paid by the borrower during the year.

NET TRANSFERS are net flows minus interest payments during the year; negative transfers show net transfers made by the borrower to the creditor during the year.

DEBT SERVICE (LTDS) is the sum of principal repayments and interest payments actually made.

UNDISBURSED DEBT is total debt undrawn at year end; data for private nonguaranteed debt are not available.

Data from individual reporters are aggregated by type of creditor. Official creditors includes multilateral and bilateral debt.

• Loans from multilateral organizations are loans and credits from the World Bank, regional development banks, and other multilateral and intergovernmental agencies. Excluded are loans from funds administered by an international organization on behalf of a single donor government; these are classified as loans from governments.

• Bilateral loans are loans from governments and their agencies (including central banks), loans from autonomous bodies, and direct loans from official export credit agencies.

Private creditors include bonds, commercial banks, and other private creditors. Commercial banks and other private creditors comprise bank and trade-related lending.

• Bonds include publicly issued or privately placed bonds.

• Commercial banks are loans from private banks and other private financial institutions.

• Other private includes credits from manufacturers, exporters, and other suppliers of goods, and bank credits covered by a guarantee of an export credit agency.

Four characteristics of a country’s debt are given as memorandum items for long-term debt outstanding and disbursed (LDOD).

Concessional LDOD conveys information about the borrower’s receipt of aid from official lenders at concessional terms as defined by the DAC, that is, loans with an original grant element of 25 percent or more. Loans from major regional development banks—African Development Bank, Asian Development Bank, and the Inter-American Development Bank—and from the World Bank are classified as concessional according to each institution’s classification and not according to the DAC definition, as was the practice in earlier reports.

Variable interest rate LDOD is long-term debt with interest rates that float with movements in a key market rate such as the London interbank offer rate (LIBOR) or the U.S. prime rate. This item conveys information about the borrower’s exposure to changes in international interest rates.

Public sector LDOD and private sector LDOD convey information about the distribution of long-term debt for DRS countries by type of debtor (central government, state and local government, central bank; private bank, private debt).

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Currency composition of long-term debt

The six major currencies in which the external debt of low- and middle-income countries is contracted are separately identified, as is debt denominated in special drawing rights and debt repayable in multiple currencies.

Debt restructurings

Debt restructurings include restructurings in the context of the Paris Club, commercial banks, debt-equity swaps, buybacks, and bond exchanges. Debt restructuring data capture the noncash or inferred flows associated with rescheduling and restructuring. These are presented to complement the cash-basis transactions recorded in the main body of the data.

Debt stock rescheduled is the amount of debt outstanding rescheduled in any given year.

Principal rescheduled is the amount of principal due or in arrears that was rescheduled in any given year.

Interest rescheduled is the amount of interest due or in arrears that was rescheduled in any given year.

Debt forgiven is the amount of principal due or in arrears that was written off or forgiven in any given year.

Interest forgiven is the amount of interest due or in arrears that was written off or forgiven in any given year.

Debt stock reduction is the amount that has been netted out of the stock of debt using debt conversion schemes such as buybacks and equity swaps or the discounted value of long-term bonds that were issued in exchange for outstanding debt.

Debt stock-flow reconciliation

Stock and flow data on total external debt are reconciled for each year, beginning with 1989. The data show the changes in stock that have taken place due to the net flow on debt, the net change in interest arrears, the capitalization of interest, the reduction in debt resulting from debt forgiveness or other debt reduction mechanisms, and the cross-currency valuation effects. The residual difference—the change in stock not explained by any of these factors—is also presented, calculated as the sum of identified accounts minus the change in stock.

Average terms of new commitments

The average terms of borrowing on public and publicly guaranteed debt are given for all new loans contracted during the year and separately for loans from official and private creditors. To obtain averages, the interest rates, maturities, and grace periods in each category have been weighted by the amounts of the loans. The grant equivalent of a loan is its commitment (present) value, less the discounted present value of its contractual debt service; conventionally, future service payments are discounted at 10 percent. The grant element of a loan is the grant equivalent expressed as a percentage of the amount committed. It is used as a measure of the overall cost of borrowing. Loans with an original grant element of 25 percent or more are defined as concessional. The average grant element has been weighted by the amounts of the loans.

Commitments cover the total amount of loans for which contracts were signed in the year specified; data for private nonguaranteed debt are not available.

Projections on existing pipeline

Projected debt service payments are estimates of payments due on existing debt outstanding, including undisbursed. They do not include service payments that may become due as a result of new loans contracted in subsequent years. Nor do they allow for effects on service payments of changes in repayment patterns owing to prepayment of loans or to rescheduling or refinancing, including repayment of outstanding arrears, that occurred after the last year of reported data.

Projected disbursements are estimates of drawings of unutilized balances. The projections do not take into account future borrowing by the debtor country. See Methodology section for a detailed explanation of the methods of projecting undisbursed balances.

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Exchange rates

Data received by the World Bank from its members are expressed in the currencies in which the debts are repayable or in which the transactions took place. For aggregation, the Bank converts these amounts to U.S. dollars using the IMF par values or central rates, or the current market rates where appropriate. Service payments, commitments, and disbursements (flows) are converted to U.S. dollars at the average rate for the year. Debt outstanding and disbursed at the end of a given year (a stock) is converted at the rate in effect at the end of that year. Projected debt service, however, is converted to U.S. dollars at rates in effect at end-December 1996. Debt repayable in multiple currencies, goods, or services and debt with a provision for maintenance of value of the currency of repayment are shown at book value.

Adjustments

Year-to-year changes in debt outstanding and disbursed are sometimes not equal to net flows; similarly, changes in debt outstanding, including undisbursed, differ from commitments less repayments. The reasons for these differences are cancellations, adjustments caused by the use of different exchange rates, and the rescheduling of other liabilities into long-term public debt.

Symbols

The following symbols have been used throughout:

0.0 indicates that a datum exists, but is negligible, or is a true zero.
.. indicates that a datum is not available.
Dollars are current U.S. dollars unless otherwise specified.

Debt stock and its components

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Aggregate net resource flows and net transfers (long-term) to developing countries

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