Sovereign debt vulnerabilitiesin developing countries © 2025, United NationsAll rights reserved worldwide Requests to reproduce excerpts or to photocopy should be addressed to the CopyrightClearance Centre at copyright.com. All other queries on rights and licences, including subsidiary rights, should be addressed to: United Nations Publications405 East 42nd StreetNew York, New York 10017United States of AmericaEmail: publications@un.orgWebsite: https://shop.un.org The findings, interpretations and conclusions expressed herein are those of the author(s) and donot necessarily reflect the views of the United Nations or its officials or Member States. The designations employed and the presentation of material on any map in this work do not implythe expression of any opinion whatsoever on the part of the United Nations concerning the legalstatus of any country, territory, city or area or of its authorities, or concerning the delimitation ofits frontiers or boundaries. Mention of any firm or licensed process does not imply the endorsement of the United Nations. This publication has not been formally edited. United Nations publication issued by the United NationsConference on Trade and Development UNCTAD/GDS/2024/4 ISBN: 978-92-1-003433-3eISBN: 978-92-1-107076-7Sales No. E.25.II.D.12 Acknowledgements This study was prepared by the Division on Globalization and Development Strategies of theUnited Nations Conference on Trade and Development (UNCTAD), by a team led by PenelopeHawkins. Team members included Daniela Magalhaes Prates, Keith Lockwood, KristineFitzpatrick, Dusan Zivkovic, Ngoc Nguyen, Yihong Gong,Oğulcan Çilingir, Marco Cereghetti,Lu Wei and Xinyuan Cui. Ursula Mohrle provided administrative support. Table of contents Acknowledgements..........................................................................iiiExecutive summary.......................................................................... vI.Introduction................................................................................. 1II.The life stages of the sovereign debt cycle and three profilesof developing countries.............................................................. 3Stage 1: Access to financial markets...................................................... 3Stage 2: Debt issuance....................................................................... 11Stage 3: Debt management and tracking............................................. 11Stage 4: Debt servicing, repayment and resilience.............................. 12Stage 5: Debt resolution or workout..................................................... 12III.Developing country profiles and access to markets.............. 15IV.Developing country profiles and their debt servicing,repayment, and resilience........................................................ 21Resilience to external shocks: Access to the Global Financial Safety Net21Debt servicing and repayment............................................................. 26V.Final remarks: Proposals for transformation......................... 33Addressing external and public sector debt sustainability................... 33Stage 1: Access to finance and markets.............................................. 34Stage 4: Debt servicing, repayment and resilience............................... 35References...................................................................................... 39Annex............................................................................................... 41 Executive summary 1.This report analyses the external vulnerabilities of developing countries based on their profileof global financial integration. Three groups of countries are identified: Emerging MarketEconomies (EMEs) that are mostly upper-middle income developing countries that integratedinto international capital markets since the 1990s, Frontier Market Economies (FMEs) thatare mainly low- or lower-middle income countries that began to access the global marketafter the Global Financial Crisis (GFC) of 2008, and Other Developing Economies (ODEs)that are associated with low degrees of integration into international capital markets andrely mainly on external public financing and official development assistance. 2.The sovereign debt life cycle is introduced to the analysis as a conceptual device to identifythe differential experience of these three groups of developing countries (EMEs, FMEs andODEs), especially as they relate to debt acquisition and access to markets, debt servicing,repayment and resilience. 3.The external creditor composition of the three country profiles reflects their relative financialintegration and exposure to private creditors. ODEs are mainly exposed to multilateral andbilateral creditors, with private creditors making up only 17 per cent of Public and PubliclyGuaranteed (PPG) debt in 2022. The private sector exposure of FMEs has virtually doubledsince 2010, making up 32 per cent of their PPG Debt