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Improving debt data and reporting

Comprehensive debt statistics are crucial for both debt crisis prevention and resolution. The Addis Agenda recalls the need to strengthen information sharing and transparency in debt sustainability assessments. 

Effective sovereign debt management requires full information on the terms and conditions of debt, contingent liabilities and domestic arrears, where they are present. These data need to provide broad coverage of the public sector, including subnational governments, social security funds and public corporations. Also, to inform debt projections, data should be available on debt contracts that have been signed but for which funds have not yet been disbursed.

Unfortunately, the full data set is often not available, with key data gaps arising from (i) countries reporting only the direct and guaranteed debt of the central administration; (ii) confidentiality clauses that prevent disclosure of key information; (iii) complex lending terms, particularly on collateralized lending; and (iv) poorly understood contingent liabilities related to potential banking sector stress, loss-making public enterprises or public-private partnerships, among others.

Building a fuller picture of developing countries’ indebtedness and potential vulnerabilities will require actions from creditors as well as debtors. Debtor governments should build capacity to collect, analyse and publish debt data for a perimeter that extends beyond the central Government, disclose undisbursed portions of agreed loans, improve accounting of contingent liabilities, keep track of arrears to suppliers, and attempt to limit use of confidentiality agreements in debt contracts they negotiate. They should also better monitor granting of officially guaranteed commercial debt, including those guaranteed by export credit agencies, as default on these loans can give rise to official arrears. Creditors should limit use of confidentiality clauses in debt contracts. Moreover, for collateralized loans tied to natural resource shipments, terms should be kept simple with compliance easy to monitor. A platform to publish comprehensive official and private sector lending is warranted.