How debt inflows differ among developing countries

The World Bank Group’s International Debt Statistics (IDS) 2015 was released today. The Bank’s flagship debt data publication features 2013 data on external debt stocks and flows, as well as other major financial indicators on the 124 developing countries that report to the The major news from this year’s IDS is that net external debt flows to developing countries rose 28% in 2013, driven by a sharp 50% increase in short-term debt inflows. Additionally, foreign direct investment in emerging economies proved to be steady and resilient, bringing net capital flows (debt and equity) to $1.2 trillion.

For more detailed analysis and trends on debt statistics, take a look at IDS’s debt portalfeaturing online tables. Here are a few highlights I thought I’d share.

China’s debt inflows increased from 35 to 139 billion USD in 2013
China saw 2013’s most notable increase in debt flows. Without China, the global picture of net debt inflows is much less dramatic:

Chart 1

​The 28% rise in aggregate net debt inflows in 2013 is largely caused by the three-fold jump in China’s debt inflows, from 35 billion to 139 billion USD between 2012 and 2013– excluding China, the aggregate rise is only 3% . This is a change from the trend of recent years. In 2011, developing countries excluding China saw a drop in debt inflows while China’s rose. The drop in net debt inflows to China came one year later, in 2012, when inflows fell drastically while rising for other developing countries combined.

Although China’s debt flows had a large impact on the overall picture for debt in developing countries, other major borrowers have trends that differ the developing countries combined.

In 2013, 20 countries accounted for 92% of debt flows to developing countries

Chart 2

¹Top 20 countries include China, Mexico, Turkey, Brazil, India, Malaysia, Indonesia, Kazakhstan, Colombia, Thailand, Hungary, Vietnam, Jordan, Morocco, Egypt, Philippines, Angola, Nigeria, Mongolia, Ecuador

The chart above shows the trend in aggregate net debt flows from 2005 to 2013 for the top 20 out of 124 countries¹, defined in terms of level of debt flows in 2013, compared to all others. In 2005, these same 20 countries combined accounted for roughly half of all debt flows, while in 2013, they accounted for 92% of all debt flows to developing countries. The split in trends occurred after the 2008 financial crisis, with the top 20 countries seeing a sharp increase in flows during 2010, while debt flows to other developing countries plateaued.

Chart 3

13 of the top 20 countries in terms of net debt flow are also on the list of top 20 countries in terms of external debt total stock levels (and the top 5 countries, by both measures, are the same: China, Brazil, Mexico, India, and Turkey). Similarly, the trend for the top 20 countries is very different than all the others combined, with a much steeper rise in debt levels among the top 20 group.

28% of net debt flows to developing countries in 2013 were short-term
While debt flows and stocks change over time, so do their composition. For instance, much of 2013’s increase in China’s debt comes from short-term debt, which accounted for 83% of flows in 2013, down from 95% in 2012. This is still much higher than developing countries excluding China, where 18% of debt flows as a whole are short-term. Since 2009, China has had the highest percentage of short-term debt to total debt of all developing countries, currently at 71%, which is 43% higher than the 28% average for all developing countries.

For more analysis and trends on debt statistics, take a look at the PDF version of the International Debt Statistics (IDS) 2015. Since 2013, IDS, published previously as the World Debt Tables (see the 1982 edition here) and then as Global Development Finance, continues to cover key trends and issues on international financial flows.

The Development Data Group is committed to making sure that IDS continues to be a highly valued resource for debt data. Please share your comments and suggestions about IDS below or e-mail us at data@worldbank.org.

Indicators and codes used in this post:

• External debt stocks, total (DOD, current US$) DT.DOD.DECT.CD
• External debt stocks, short-term (DOD, current US$) DT.DOD.DSTC.CD
• Net flows on external debt, long-term (NFL, current US$) DT.NFL.DLXF.CD

This article is published in collaboration with The World Bank’s Open Data Blog. Publication does not imply endorsement of views by the World Economic Forum.

To keep up with Forum:Agenda subscribe to our weekly newsletter.

Author: Molly Watts works on DECDG’s Financial Data Team, and collects and compiles debt statistics as part of World Bank’s Debt Reporter System.

Image: A man rides an escalator near Shanghai Tower (R, under construction), Jin Mao Tower (C) and the Shanghai World Financial Center (L) at the Pudong financial district in Shanghai July 4, 2013. REUTERS/Carlos Barria