Beyond Aid: How Much Should African Countries Pay to Borrow?

22 Pages Posted: 21 Jun 2010

See all articles by Cheikh Anta Gueye

Cheikh Anta Gueye

International Monetary Fund (IMF)

Amadou Nicolas Racine Sy

International Monetary Fund (IMF) - International Capital Markets Department; Brookings Institution

Date Written: June 2010

Abstract

Post debt relief, the number of African countries considering accessing international capital markets, often to fund large infrastructure projects, is increasing. Potential risks of capital inflows are well known but the literature offers little help to estimate the cost of borrowing internationally for the first time. This paper proposes a two-step approach to estimate the sovereign credit rating and interest rate cost of a country considering borrowing externally. Estimates can be used to assess the costs and benefits of different financing options. The method can also be used to construct foreign currency as well as domestic local currency yield curves.

Keywords: External borrowing, External financing, Capital inflows, International bond markets, International capital markets, Infrastructure, Low-income developing countries, Africa

Suggested Citation

Gueye, Cheikh Anta and Sy, Amadou Nicolas Racine, Beyond Aid: How Much Should African Countries Pay to Borrow? (June 2010). IMF Working Paper No. 10/140, Available at SSRN: https://ssrn.com/abstract=1627075

Cheikh Anta Gueye

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Amadou Nicolas Racine Sy

International Monetary Fund (IMF) - International Capital Markets Department ( email )

700 19th Street NW
Room 9-548
Washington, DC 20431
United States
202-623-8651 (Phone)
202-589-8561 (Fax)

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
71
Abstract Views
677
rank
365,700
PlumX Metrics