应对不可持续的债务

Summary Summary • Low- and middle-income countries still face debt problems. Several of them have fallen into default in the past three years. The G20 Common Framework was created to support these countries with their debt issues. However, debt restructuring in this initiative is slow. • Debt restructuring has become increasingly complex due to the diverse creditor base. The creditor composition has changed over time, with the most significant developments being the increased share of China and bondholders in external debt. • China has a different approach towards problematic debtors than the Paris Club countries which complicates restructuring negotiations. It is also difficult to get bondholders on the same page and to get their proposals approved by the official creditors. • The complex creditor landscape has made debt negotiations longer and more difficult. The restructuring issues in countries like Zambia, Ghana and Sri Lanka underline this. Despite various initiatives to improve this, a solution is not yet in sight. A series of adverse developments have increased the debt problems of vulnerable countries. The Covid-19 pandemic and the Russian invasion of Ukraine led to disrupted global supply chains, higher inflation and rising interest rates. These external shocks came on top of policy failures and other domestic problems, creating a perfect storm for many countries. In the past three years, the number of sovereign debt defaults in developing countries totalled 18, outstripping the total over the previous two decades. More may follow in the coming year as 20 countries eligible to borrow from the World Bank’s International Development Association (IDA) are at high risk of debt distress. The problematic situation does not apply to all debtor countries. There is no general debt crisis as in previous periods since many countries are well positioned to cope with the challenging environment. Many low-income and several middle-income countries, however, are in a vulnerable position. Spurred by previously low interest rates, high investment needs and a lack of domestic revenues, debt in many poor countries has risen to worrying levels. According to the World Bank, IDA-eligible countries saw their total externally financed debt rising by 109% between 2012 and 2022, reaching a record USD 1.1 trillion. The increase was almost twice as fast as the 58% increase seen in middle-income countries. As a result, the debt-servicing costs on public and publicly guaranteed (PPG) debt for low-income countries are expected to rise by as much as 40% in 2023-2024, consuming a Coping with unsustainable debt The increasingly complex puzzle of debt restructuring Atradius Economic Research – April 2024 Atradius Economic Research 2 significant share of government revenues.1 The Fed is expected to start monetary easing later this year, which could provide some relief. However, the low interest rate environment as before the pandemic is not coming back.2 Moreover, because more than a third of that debt is financed at variable interest rates, the number of countries ending up in a debt crisis easily can increase further in the coming years. Figure 1 Strong increase of countries with debt problems If a country is in or close to an external debt crisis, it is now more difficult to find a solution than before. Negotiations about debt restructuring take more time and sometimes fail to even get started. It is the emergence of new creditors that plays an important role in this. New lenders take prominent role At first glance, the creditor composition of long-term public and PPG debt in the last 10 years has not changed much. In 2022, IDA-eligible countries borrowed 50% from multilateral institutions, 29% from bilateral official creditors and 21% from private lenders. In 2012, these creditor groups accounted for 56%, 33% and 10% respectively. Apart from the doubling of share of private creditors, the changes are limited. However, if we delve further into the data, two developments stand out. Figure 2 No big changes of public debt creditor composition at first sight First, China's share within the group of bilateral creditors has risen sharply. In 2006, Chinese official creditors provided just 2% of PPG debt, but by 2020 this had risen to 18%. The increased share of China came at the expense 1 World Bank International Debt Report 2023 2 The IMF, for example, mentions in its recent World Economic Outlook that low-income countries’ interest payments are of lending by Paris Club countries, which fell from 28% to 10% of total loans granted to public borrowers over the same period. During the Covid-19 pandemic, new debt commitments to low- and middle-income economies from China decreased – in line with lower total new commitments to these countries, as we describe below. However, this does not change the fact that developing countries currently borrow more from China than from the group of 22 Paris Club countries. Figure