Governance Improvements and Sovereign Financing Costs in Developing Countries

• Tác giả: Michael Brown
• Ngôn ngữ: eng
• Ký hiệu phân loại: 910.91 Geography of and travel in areas, regions, places in general
• Thông tin xuất bản: World Bank, Washington, DC, 2019
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 299847
• Chủ đề: 1. COUNTRY POLICY AND INSTITUTIONAL ASSESSMENT; 2. DEBT MARKETS; 3. DEVELOPMENT FINANCE; 4. GOVERNANCE; 5. INTERNATIONAL CAPITAL MARKETS

Tóm tắt

 More and more developing country governments are tapping the global debt capital markets. Thisis increasing the amount of finance available for development, but at a considerably higher costthan traditional external borrowing on concessional terms. Using a novel methodology based onestimating sovereign credit ratings using the Moody's scorecard, and examining the associationsbetween these ratings and the World Bank's Country Policy and Institutional Assessment (CPIA)scores, this paper examines how making improvements in the quality of economic policies andinstitutions can help lower governments' financing costs. Better CPIA scores are associated withbetter estimated ratings and materially lower financing costs
  on average, improvements which aresufficient to increase a CPIA indicator score by 1 point are associated with interest costs which are lower by about 170 basis points. Estimated cost savings are the largest for countries with weaker initial ratings and commensurately high external debt issuance costs, consistent with governance concerns contributing significantly to the large risk premia faced by weaker borrowers.