Small States -- Performance in Public Debt Management

31 Pages Posted: 20 Apr 2016

See all articles by Abha Prasad

Abha Prasad

affiliation not provided to SSRN

Malvina Pollock

affiliation not provided to SSRN

Ying Li

World Bank

Date Written: February 1, 2013

Abstract

This paper analyzes the status of public debt management performance in 17 small states through the findings of the Debt Management Performance Assessment reports. Empirical evidence indicates that the higher the quality of a country's policies and institutions, the better is its capacity to carry debt and withstand exogenous shocks. Borrowing for productive purposes can be an important element in boosting growth of gross domestic product but, conversely, excessive borrowing or poorly structured debt in terms of maturity, currency, or interest rate composition can quickly offset the positive impact, deter new foreign and domestic investment, compromise reform programs, depress growth of gross domestic product, exacerbate the challenge of meeting debt service obligations, and may induce or propagate economic crises. Arguments in favor of sound debt management are especially compelling for small states that must mitigate the particular risks to which their economies are exposed. Against this backdrop, the paper identifies aspects of debt management where small states do relatively well and those where they perform poorly, relative to other developing countries, and examines the underlying factors at play. It elaborates on some of the successful measures taken by small states to enhance debt management performance and considers how these may be applied more broadly in other small states. The paper offers a number of practical suggestions to strengthen debt management performance.

Keywords: Debt Markets, External Debt, Emerging Markets, Public Sector Economics, Access to Finance

Suggested Citation

Prasad, Abha and Pollock, Malvina and Li, Ying, Small States -- Performance in Public Debt Management (February 1, 2013). World Bank Policy Research Working Paper No. 6356, Available at SSRN: https://ssrn.com/abstract=2213155

Abha Prasad (Contact Author)

affiliation not provided to SSRN ( email )

Malvina Pollock

affiliation not provided to SSRN

No Address Available

Ying Li

World Bank

1818 H Street, NW
Washington, DC 20433
United States

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