Working Paper

Push and Pull : Emerging Risks in Frontier Economy Access to International Capital Markets

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collection.link.213
https://openknowledge.worldbank.org/handle/10986/11866
collection.name.213
Other papers
dc.contributor.author
Haque, Tobias
dc.contributor.author
Bogoev, Jane
dc.contributor.author
Smith, Greg
dc.date.accessioned
2017-03-15T19:34:14Z
dc.date.available
2017-03-15T19:34:14Z
dc.date.issued
2017-02
dc.date.lastModified
2021-05-25T08:58:27Z
dc.description.abstract
Over the past decade, a large number of low- and lower-middle income ‘frontier economies’ have begun to access international private capital markets to meet fiscal financing needs. In this paper we seek to identify drivers of this trend, identify associated risks, and present policy implications for frontier-market policy-makers. Through simple analysis of the characteristics of recent frontier market issuers, we show that smaller, poorer, and less well-governed economies are now accessing global credit markets. Through cross-country regression analysis, however, we demonstrate that the capacity of these countries to issue debt (and the cost of this debt) continues to be influenced by their macroeconomic performance and quality of governance. Drawing on evidence from Ghana and Zambia, we illustrate potential risks arising from recent expansions of access to global debt markets, where rapid debt accumulation of foreign-denominated debt in the context of lessened market discipline and following recent debt relief is now posing pronounced debt sustainability and refinancing risks. We conclude that increased access to international debt markets presents both opportunities and risks to frontier issuers. The new cohort of frontier issuing economies should: i) take careful account of debt risks and debt sustainability considerations when developing fiscal policy and debt strategies; ii) work to reduce the costs of ongoing external borrowing through adopting sound economic policies and protecting credit ratings; and iii) develop domestic debt markets as a potential alternative source of fiscal financing through which to reduce reliance on foreign-denominated Eurobond debt with its associated refinancing and currency risks.
en
dc.identifier
http://documents.worldbank.org/curated/en/448611487936936412/Push-and-pull-emerging-risks-in-frontier-economy-access-to-international-capital-markets
dc.identifier.uri
http://hdl.handle.net/10986/26273
dc.language
English
dc.language.iso
en_US
dc.publisher
World Bank, Washington, DC
dc.relation.ispartofseries
MFM Discussion Paper;No. 17
dc.rights
CC BY 3.0 IGO
dc.rights.holder
World Bank
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo
dc.subject
debt
dc.subject
Eurobonds
dc.subject
debt sustainability
dc.subject
macroeconomics
dc.subject
finance
dc.subject
frontier markets
dc.title
Push and Pull
en
dc.title.subtitle
Emerging Risks in Frontier Economy Access to International Capital Markets
en
dc.type
Working Paper
en
okr.crossref.title
Push and Pull
okr.date.disclosure
2017-02-24
okr.doctype
Publications & Research
okr.doctype
Publications & Research :: Working Paper
okr.docurl
http://documents.worldbank.org/curated/en/448611487936936412/Push-and-pull-emerging-risks-in-frontier-economy-access-to-international-capital-markets
okr.googlescholar.linkpresent
yes
okr.identifier.doi
10.1596/26273
okr.identifier.externaldocumentum
090224b0849810cd_1_0
okr.identifier.internaldocumentum
27220679
okr.identifier.report
112988
okr.imported
true
okr.language.supported
en
okr.pdfurl
http://documents.worldbank.org/curated/en/448611487936936412/pdf/112988-WP-MFM-Discussion-Paper-17-2017-02-Push-and-Pull-FINAL-PUBLIC.pdf
en
okr.topic
Finance and Financial Sector Development :: Access to Finance
okr.topic
Finance and Financial Sector Development :: Capital Markets and Capital Flows
okr.topic
Finance and Financial Sector Development :: Debt Markets
okr.topic
Finance and Financial Sector Development :: International Financial Markets
okr.unit
GMF - South Asia (GMF06)

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