Since 1951, when the World Bank began lending to member countries for reconstruction and development, borrowing countries have been required to report detailed information on their external liabilities through the World Bank’s Debtor Reporting System (DRS). The collected data is essential to the World Bank’s operational and analytical work. Operationally, the World Bank’s lending activities demand detailed and timely data on the debt servicing capacity and overall financial situation of a country, such as the Debt Sustainability Analysis (DSA) and the Debt Management Performance Assessment (DeMPA). Analytically, the data is used to assess credit worthiness and serves as the foundation for World Bank research and analysis.
The launch of the “World Debt Tables” in 1973 marked the first publicly available publication of this data. Over the next five decades, the analytical content of the publication and the data coverage have significantly expanded. As we approach its 50th anniversary, the International Debt Report (IDR) has become one of World Bank’s premier publications, and the accompanying International Debt Statistics (IDS) database is what makes the publication possible. This data is a uniquely comprehensive and verifiable source on the external indebtedness of low- and middle-income countries, which is publicly available to policymakers, researchers, investors, and analysts alike to monitor global economic trends, analyze debt sustainability, and develop strategies for sustainable economic growth.
So, how exactly are these statistics compiled? Let’s take a closer look at the compilation process behind the World Bank’s DRS.
1. Data Collection - The DRS is maintained by the World Bank’s Debt Team in the Development Data Group. The first step for the team is to collect loan-level data directly from low- and middle-income countries borrowing from the World Bank. The DRS data consists of long-term external debt, which is specifically defined as the outstanding amount of those actual current, and not contingent, liabilities with an original maturity of more than one year and owed by residents of the reporting country to nonresidents thereof.
The loan-level data is reported for new commitments and year-end status and transactions of long-term external public debt. This is typically reported by the country’s Ministry of Finance and includes:
- obligations of the state and local governments;
- obligations of any public sector entity in which the government holds a ≥50% share (whether, or not, the obligation is related to a loan guaranteed by the state); and
- obligations of private sector entities that benefit from a guarantee by the state.
Long-term non-guaranteed external debt in the private sector is reported at the aggregate level by the country’s Central Bank. The country can also report short-term external debt on a voluntary basis. Countries are able to directly export the DRS reports from their debt management systems or manually fill out electronic forms and then send them to the World Bank’s Debt Team. The Debt Team also collects lending data directly from a few multilateral institutions and updates the database with the latest exchange rates and macroeconomics indicators such as Foreign Direct Investment (FDI), Remittances, and Gross National Income (GNI).
2. Validation and Quality Checks – Once the data is submitted, debt specialists laboriously and methodically verify the reports. This meticulous process involves checking imbalances, ensuring all transactions and new commitments are reported, and comparing the data against a variety of sources:
- debtor countries’ debt bulletins and publications;
- creditor sources such as G7 countries’ creditor data report and reports published by multilateral lending bodies such as the European Investment Bank, Japan International Cooperation Agency, etc.;
- market data sources;
- academic sources;
- IMF Article IV and International Investment Position; and
- Quarterly External Debt Statistics (QEDS).
Throughout the validation and reconciliation process, there is constant communication with the reporting country to ensure that their debt office can verify any inconsistencies.
3. Aggregation – The loan-level data is strictly confidential and not publicly available. To make this valuable resource available for public use, the data is aggregated into over 500 indicators on debt stocks and financial flows for the reporting 120+ countries spanning over 50 years. The indicators cover countries’ external debt disaggregated by creditor and borrower type and more recently by creditor country and multilateral institution.
4. Analysis and Dissemination – Now the database (IDS) and the report (IDR) are ready for publication! The statistical database is accompanied by the IDR’s up-to-date findings and analysis. Whether it is regional or national specific trends, or compositions and characteristics of external debt flows of low- and middle-income countries, our debt experts dig into the nooks and crannies of the data and capture emerging trends in debt flows and borrowing patterns critical for stakeholders in the global development circles. Our analysis also highlights lending trends against the backdrop of current issues, such as COVID-19 induced economic shocks, geopolitical conflicts, surging interest rates, and increased bilateral lending among low- and middle-economics.
These two products are shared with users around the world and made available online through the World Bank's Debt Statistics website. Users can also access the data through a variety of sources, including DataBank, our online statistical tables, or through the Application Programming Interface (API). The behind-the-scenes work is complex and thorough, but necessary to deliver comprehensive and high-quality data.
This year will be the IDR’s 50th anniversary, but it also marks a 50-year high in low- and middle-income economies’ public debt levels. This substantial debt accumulation due to multiple ongoing global events means that comprehensive debt data is more essential than ever to strengthen accountability and avoid disorderly debt restructuring. The IDS and IDR, as global public goods, will continue to play pivotal roles in promoting and delivering debt transparency for policymakers and academia. Don’t forget to check them out!