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Over the past decade, a large number of low- and lower-middle income 'frontier economies' have begun to access international private capital markets to meet fiscal financing needs. In this paper we seek to identify drivers of this trend, identify associated risks, and present policy implications for frontier-market policy-makers. Through simple analysis of the characteristics of recent frontier market issuers, we show that smaller, poorer, and less well-governed economies are now accessing global credit markets. Through cross-country regression analysis, however, we demonstrate that the capacity of these countries to issue debt (and the cost of this debt) continues to be influenced by their macroeconomic performance and quality of governance. Drawing on evidence from Ghana and Zambia, we illustrate potential risks arising from recent expansions of access to global debt markets, where rapid debt accumulation of foreign-denominated debt in the context of lessened market discipline and following recent debt relief is now posing pronounced debt sustainability and refinancing risks. We conclude that increased access to international debt markets presents both opportunities and risks to frontier issuers. The new cohort of frontier issuing economies should: i) take careful account of debt risks and debt sustainability considerations when developing fiscal policy and debt strategies; ii) work to reduce the costs of ongoing external borrowing through adopting sound economic policies and protecting credit ratings; and iii) develop domestic debt markets as a potential alternative source of fiscal financing through which to reduce reliance on foreign-denominated Eurobond debt with its associated refinancing and currency risks.

Access to Finance --- Capital Markets and Capital Flows --- Debt --- Debt Markets --- Finance --- Finance and Financial Sector Development --- International Financial Markets --- Macroeconomics

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Medium-Term Debt Management Strategy Analytical Tool: Data Preparation Manual.

Debt. --- Finance --- Management. --- Banks --- Currencies --- Currency --- Debt service --- Depository Institutions --- Exchange rates --- Exports and Imports --- External debt --- Financial institutions --- Financial instruments --- Foreign Exchange --- Foreign exchange --- General Financial Markets: General (includes Measurement and Data) --- Government and the Monetary System --- Industries: Financial Services --- Interest payments --- International economics --- International Lending and Debt Problems --- Investment & securities --- Investments: General --- Loans --- Micro Finance Institutions --- Monetary economics --- Monetary Systems --- Money and Monetary Policy --- Money --- Mortgages --- Payment Systems --- Regimes --- Securities --- Standards --- China, People's Republic of

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This report provides guidance on using the Analytical Tool of the Medium-Term Debt Management Strategy (MTDS). The MTDS framework consists of a methodology, published as the ‘Guidance Note for Developing a Medium-Term Debt Management Strategy’, and an associated analytical tool (AT) that can be used to assess the cost-risk trade-offs of alternative strategies to help identify the preferred strategy. The MTDS framework supported by the AT quantitative analysis helps to determine the financing strategy. The chosen debt management strategy sets out the financing composition path to meet the debt management objective(s). The profile of future interest payments and the amortizations of new debt are driven by the debt management strategy. The MTDS AT is based on annual cash flow. Although this assumption is enough for analyzing alternative debt management strategies, in some cases, particularly for countries that are heavily dependent on short-term securities with maturities of less than a year, it would be helpful to work with cash flows with higher frequency.

Budget Systems --- Currencies --- Currency --- Debt service --- Exchange rates --- Exports and Imports --- External debt --- Finance, Public --- Financial institutions --- Financial instruments --- Foreign Exchange --- Foreign exchange --- General Financial Markets: General (includes Measurement and Data) --- Government and the Monetary System --- Government cash forecasting --- Interest payments --- International economics --- International Lending and Debt Problems --- Investment & securities --- Investments: General --- Monetary economics --- Monetary Systems --- Money and Monetary Policy --- Money --- National Budget --- Payment Systems --- Public finance & taxation --- Public Finance --- Public financial management (PFM) --- Regimes --- Securities --- Standards --- United States