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Are South Asian countries sinking into a debt trap?

Bidisha Das's picture

This blog is part of a series based on International Debt Statistics 2018.

The 2018 edition of International Debt Statistics (IDS 2018) which presents statistics and analysis on financial flows (debt and equity) for 123 low-and middle-income countries has just been released. One of the key observations of IDS 2018 is that net financial flows in 2016 to all developing countries witnessed a more than threefold increase over their 2015 level. This was driven entirely by net debt flows, which increased by $542 billion in 2016. Consequently, total external debt outstanding of all developing countries went up to $6.9 trillion, an increase of 4.1 percent over 2015. Interestingly, South Asia seems to deviate from this norm of IDS 2018.

External debt outstanding of South Asia contracted in 2016

South Asia is the only region that has shown a contraction in the total external debt outstanding in 2016. The total external debt stock of South Asia contracted by almost 2 percent as net debt flows into the region turned negative ($-7.7) for the first time in a decade. More specifically, this is the result of net long-term external debt flows turning negative (-$12.5 billion) implying that principal repayments by South Asia, on long-term external debt far exceeded disbursements.

International debt flows before and after the financial crisis

Evis Rucaj's picture

New debt statistics show that the composition of long term debt inflows in 2011 follows pre-crisis patterns.

Debt statistics are central to understanding the impact of the financial crisis; the World Bank's International Debt Statistics provides a detailed picture of debt flows of 128 developing countries. Now that the 2013 edition has been released, and as a member of the team that put it together, I thought I would look back at what the data tell us actually happened to international debt flows to developing countries before and after the recent financial crisis.