World Bank International Debt Report (IDR), 2023

The International Debt Report (IDR) is a longstanding annual publication of the World Bank featuring external debt statistics and analysis for the 122 countries that report to the World Bank Debtor Reporting System.

The International Debt Report ((IDR) 2023 is the 50th annual edition and includes

(1) analyses of external debt stocks and flows as of end-2022 for these countries;

(2) the macroeconomic and debt outlook for 2023 and beyond;

(3) a focus on improved public debt transparency and the quality of debt reporting;

(4) a discussion of the need for innovative approaches to debt management;

(5) a commentary on how the International Debt Statistics database serves as an indispensable resource for researchers and policy makers; and

(6) a one-page snapshot of relevant debt indicators and summary of debt stocks and flows for six years (2010 and 2018–22) for each country, plus global income group and regional aggregates.

Unique in its coverage of the important trends and issues fundamental to the financing of low- and middle-income countries, IDR 2023 is an indispensable resource for governments, economists, investors, financial consultants, academics, bankers, and the entire development community.

                                                                  source: World bank site

The report analyses external debt statistics for 122 low- and middle-income countries (LMICs).

Key highlights of Report

• Historic rise in debt: Public and publicly guaranteed (PPG) debt service payments by LMICs totaled US$443.5 billion in 2022.
  ♦ Over 1/3rd of such debt carries variable interest rates, posing risk of sudden increases.
• Debt Service cost: Due to rising interest rates and unfavourable exchange rate movement, servicing external
  debt could become burdensome.
  ♦ India’s debt service was 2% of the GNI in 2022. Crowding out of priorities: Debt servicing could crowd out spending on other development priorities (health, education,  etc).
• Outflow of money: Due to a tighter monetary policy in advanced economies investors found attractive returns in US and European bond markets.
  ♦ This led to a net outflow of US$127.1 billion from LMICs.

Recommendations of Report

• Portfolio analysis: Closely scrutinize terms of debt instruments to identify risks and costs.
• Debt buybacks: To reduce a country’s stock of nominal debt if the debt is trading at a deep discount.
• Debt exchanges: Swapping outstanding debt for new debt to lengthen the average maturity of the debt portfolio and reduce short-term maturities.
• Debt-for-nature swaps: To combine debt relief to participating sovereigns with partial earmarking of the
  freed-up resources for green projects.

About external debt

• External debt refers to money borrowed from a source outside the country.
• It is a vital source to supplement the local revenue for development.
• However, it has to be paid back in the currency in which it is borrowed which enhances the debt vulnerability due to exchange rate fluctuations.

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