Net debt inflows from private creditors rebounded in 2010 Official creditors
Net debt flows (US$ billions)
Private creditors
Short term
525
Sub-Saharan Africa saw significant reductions in its external debt stocks over the last decade, mostly due to HIPC and MDRI External debt stocks (% of GNI)
450
70
375
60
300
50
2000
2010
40
225
30
150
20
75
10 0 -75
0 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: World Bank, Global Development Finance database
Bank Group made $43 billion in new commitments and disbursements of $34 billion. This included commitments of $32 billion made through the International Bank for Reconstruction and Development (IBRD) at market rates and $11 billion in grants and concessional lending made by the International Development Association (IDA). Debt burdens and debt relief Overborrowing and unexpected events such as terms-of-trade shocks, natural disasters, or civil conflict can turn ordinary debt burdens into unmanageable ones. Oil price increases in the 1980s precipitated a debt crisis among middle-income countries. For many poor countries, especially those in Africa, debt burdens became unsustainable after a decade of slow growth in the 1990s. In 1996, the World Bank and the International Monetary Fund (IMF) launched the Heavily Indebted Poor Countries (HIPC) initiative to provide relief to low-income countries with recurring debt repayment problems. The initiative aimed to provide permanent relief from unsustainable debt and to redirect the resources going to debt service to social expenditures aimed at poverty reduction. By the end of 2011, 36 countries had participated in the initiative and received debt relief of $76.4 billion. Since 2006, the World Bank, the IMF, the African Development Fund, and the Inter-American Development Bank have provided additional debt relief under the Multilateral Debt Relief Initiative (MDRI). As of September 2011, 32 HIPC countries, primarily in Sub-Saharan Africa, had received additional assistance of $47.1 billion under the MDRI.
East Asia Europe & Latin Middle East South & Pacific Central America & & North Asia Asia Caribbean Africa
SubSaharan Africa
Source: World Bank, Global Development Finance database
All developing regions have improved their external debt position. Measured against gross national income (GNI), the stock of external debt was 21 percent in 2010, compared to 37.8 percent in 2000. The ratio of debt service (principal and interest payments) to exports fell to 9.8 percent. And the ratio of external debt outstanding to exports fell from 128.5 percent in 2000 to 68.7 percent in 2010. East Asia and the Pacific and the Middle East and North Africa had the lowest external debt ratios. Europe and Central Asia was the most indebted region in 2010: the ratios of external debt outstanding to GNI (43 percent) and to export earnings (121 percent) were three times those of the East Asian countries. The debt-to-export ratio in Sub-Saharan African countries declined to 54 percent at the end of 2010, compared with 185.1 percent in 2000, and the debt service to export ratio fell to 3.3 percent, less than one-third its 2000 level.
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