Publication:
Economic Governance Improvements and Sovereign Financing Costs in Developing Countries

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dc.contributor.authorAbate, Girum
dc.contributor.authorBrown, Michael
dc.contributor.authorSienaert, Alex
dc.contributor.authorThomas, Mark
dc.date.accessioned2021-05-06T14:35:35Z
dc.date.available2021-05-06T14:35:35Z
dc.date.issued2021-05
dc.description.abstractLow- and middle-income country governments are increasingly tapping the global debt capital markets. This is increasing the amount of finance available for development, but at a considerably higher cost than traditional external borrowing on concessional terms. Using a novel methodology based on estimating sovereign credit ratings using the Moody’s scorecard, and examining the associations between these ratings and the World Bank’s Country Policy and Institutional Assessment scores, this paper examines how making improvements in the quality of economic policies and institutions can help lower governments’ financing costs. This method aims to overcome the small-sample problem due to the number of rated developing country sovereigns still being relatively limited (although growing). Better economic governance Country Policy and Institutional Assessment scores are associated with better estimated ratings and materially lower financing costs; on average, improvements that are sufficient to increase the Country Policy and Institutional Assessment economic governance indicator score by one point are associated with interest costs that are lower by about 40 basis points, even setting aside the direct impact on ratings of better governance indicators. There are many reasons why improving governance is a good thing. Among them is the potential payoff to the public purse — savings of $40 million or more on a standard $1 billion, 10-year bond.en
dc.identifierhttp://documents.worldbank.org/curated/en/565681620234717531/Economic-Governance-Improvements-and-Sovereign-Financing-Costs-in-Developing-Countries
dc.identifier.doi10.1596/1813-9450-9649
dc.identifier.urihttps://hdl.handle.net/10986/35547
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 9649
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectGOVERNANCE
dc.subjectPUBLIC FINANCIAL MANAGEMENT
dc.subjectDEBT MANAGEMENT
dc.subjectSOVEREIGN CREDIT RATING
dc.subjectPUBLIC DEBT
dc.subjectSOVEREIGN DEBT
dc.subjectSOVEREIGN BOND MARKET
dc.subjectCAPITAL MARKETS
dc.subjectCOUNTRY POLICY AND INSTITUTIONAL ASSESSMENT
dc.subjectFINANCING COSTS
dc.titleEconomic Governance Improvements and Sovereign Financing Costs in Developing Countriesen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crossref.titleEconomic Governance Improvements and Sovereign Financing Costs in Developing Countries
okr.date.disclosure2021-05-05
okr.date.doiregistration2025-04-10T11:26:39.067796Z
okr.doctypePublications & Research
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://documents.worldbank.org/curated/en/565681620234717531/Economic-Governance-Improvements-and-Sovereign-Financing-Costs-in-Developing-Countries
okr.guid565681620234717531
okr.identifier.doi10.1596/1813-9450-9649
okr.identifier.externaldocumentum090224b08857b221_1_0
okr.identifier.internaldocumentum33053168
okr.identifier.reportWPS9649
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/565681620234717531/pdf/Economic-Governance-Improvements-and-Sovereign-Financing-Costs-in-Developing-Countries.pdfen
okr.statistics.combined1364
okr.statistics.dr565681620234717531
okr.statistics.drstats762
okr.topicFinance and Financial Sector Development::Capital Markets and Capital Flows
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicFinance and Financial Sector Development::Strategic Debt Management
okr.topicGovernance::Governance and the Financial Sector
okr.topicPublic Sector Development::Public Financial Management
okr.unitCountry Credit Risk Department
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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