Experience of Ten Countries: Low-Income Countries' External Debt Histories Yield Lessons for Future
| Pages | 180-181 |
Page 180
The debt burden increased markedly between the late 1970s and the early 1990s in all ten countries (see table, page 181). In the late 1970s, their external debt-to-exports ratios stood at relatively moderate levels, at about 200 percent or below (Bolivia was the highest at 260 percent). For Cameroon, Ghana, Niger, and Uganda, the ratio was somewhat lower, at about 100 percent. However, by the early 1990s, most sample countries' debt-to-exports ratio had increased by at least three or four times.
In Nicaragua and Uganda-the countries with the largest increase in the debt-to-exports ratio between 1976-80 and 1991-95-the ratios rose as a result of a large increase in the nominal debt stock-some 600 percent in U.S. dollar terms. Clearly, the study observes, external borrowing was not used to enhance effective export capacity. Indeed, weak export performance was partly responsible for the need to borrow and reschedule to support adjustment efforts. In contrast, Kenya kept its debt at manageable levels and experienced one of the smallest increases in the debt-to-exports ratio between 1976-80 and 1991-95. This reflected its success in achieving high export growth (about 55 percent in U.S. dollar terms) in tandem with substantive borrowing-its debt stock increased by 215 percent over this period. Bolivia's debt-to-exports ratio peaked earlier-it increased more than fourfold between 1976 and 1987 as the country's debt grew by 450 percent, while exports, after increasing rapidly through 1980, declined to close to their initial level.
In the early 1990s, for most countries, the net present value (NPV) of debt-to-export ratios was lower than the nominal ratios because a significant share of debt was concessional. The study notes that, given that the share of concessional debt increased over time, the NPV ratios would not have increased as quickly as the nominal ratios. A lack of NPV data for the earlier period makes it difficult to judge the extent of this change. Nonetheless, the present value ratios were still above 220 percent in 1991-95 for five sample countries despite the sizable share of concessional debt (see table, page 181).
A combination of elements, rather than a single factor, was responsible for the increase in the sample countries' external debt burden, the study...
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