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South Asia: beneficiaries and supporter of the Debt Service Suspension Initiative

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Countries in the South Asia region are home to more of the world’s poor than any other part of the globe and most are classified as low or lower-middle income. Six of the eight countries in the region, Afghanistan, Bangladesh, Bhutan, Maldives, Nepal and Pakistan are IDA borrowers and therefore eligible for the Debt Service Suspension Initiative (DSSI). India, the world’s third largest economy, is also a lower-middle income country but, over the past decade, has become an important source of intra or so-called South-South financing between low- and middle-income countries. As a member country of the G20, India committed to participation in the DSSI and extend the agreed debt service moratorium to borrowers that request it.

The six South Asian DSSI-eligible countries had a total external public debt of US$ 135 billion at end-2019, equivalent to over 25% of the external public debt of all DSSI-eligible countries combined. This large share owed by such a small number of countries reflects the fact that the two largest DSSI-eligible borrowers are in South Asia, Pakistan and Bangladesh. South Asian countries have borrowed primarily from official creditors and on average owed only 7% of end-2019 external public debt stock to private creditors. This is a marked contrast to other DSSI-eligible countries, where the comparable share owed to private creditors at end-2019 was 25%. South Asian countries obligations to private creditors accounted for less than 2% of DSSI-eligible countries combined external public debt at end-2019.

The public debt stock of South Asian countries at end-2019 comprised US$74 billion (55%) owed to multilateral creditors, US$51 billion (38%) to bilateral creditors and US$10 billion (7%) to private creditors (bond holders, commercial banks and other private entities). At the individual country level, the composition of external debt stocks varied. In four countries (Afghanistan, Bangladesh, Nepal and Pakistan) multilateral creditors accounted for over 50% of end-2019 external public debt, including Bangladesh (67%) and Nepal (87%). In contrast, Bhutan owed 74% of its external public debt to bilateral creditors. Only two countries, Maldives and Pakistan (classified as a blend IBRD-IDA borrower creditworthy for some market-based financing) have issued bonds in international capital markets. Private creditors accounted for 35% of Maldives external public debt stock and 11% for Pakistan.

Viewed from the creditor perspective, the World Bank (mostly IDA) was South Asian countries' single largest creditor, with claims of US$35 billion at end-2019, equivalent to 47% of debt owed to multilateral creditors and 26% of total external public debt. Among multilateral creditors the Asian Development Bank was the second largest with claims of US$25 billion (34%). Of the US$10 billion owed to the IMF at end-2019 over 80% was accounted for by Pakistan. Obligations to China—US$24.9 billion at end-2019—made it by far the largest bilateral creditor (49%) followed by Japan (25%), Russia (7%) and India (5%).  Borrower’s bilateral debt stocks are also concentrated. Maldives and Pakistan owed 80% and 63% respectively, of their bilateral debt to China. In Afghanistan 86% was owed to Russia and 97% of Bhutan’s bilateral obligations were to India. 

India is the World Bank’s largest borrower but over the past decade it has also become an important bilateral creditor to low- and middle-income countries.  India’s outstanding public debt claims on DSSI-eligible countries, mostly those of India Exim-Bank, totaled $6.4 billion at end-2019, more than triple their level in 2010. India’s DSSI-eligible South Asian neighbors accounted for 42% of these claims at end-2019, up from 29% in 2010 and India is their fourth largest bilateral creditor. These countries are also some of India’s most important borrowers. Bhutan ranks number one with outstanding bilateral obligations to India of $1.9 billion at end-2019, followed by Bangladesh with US$0.5 billion.


Daniella Kathyuska Bolanos-Misas

Debt Statistics, Development Data Group, World Bank

Malvina Pollock

Consultant, Development Data Group, World Bank

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