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Debt Accumulation in the CIS-7 Countries

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Author Info

  • Ashoka Mody
  • Ratna Sahay
  • Thomas Helbling

Abstract

Following the breakup of the Soviet Union in 1992, several low-income countries in the Commonwealth of Independent States (CIS) accumulated substantial external debt in a short time span, about half of which is owed to multilateral financial institutions. Three factors contributed to the current debt burden. First, the initial years of transition brought large systemic economic disruptions, loss of transfers from the center and collapse of trade relations among Council for Mutual Economic Assistance (CMEA) countries, and negative terms of trade shocks. Second, fiscal and other reforms, and consequently, growth revival, took longer than expected. Third, overoptimism by multilaterals contributed to the high debt levels. If external financial assistance, which was needed because of high social costs of the transition, had come in the form of grants in the first two or three years of the transition, the debt burden would have been lower and sustainable.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/93.

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Length: 42
Date of creation: 01 May 2004
Date of revision:
Handle: RePEc:imf:imfwpa:04/93

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Keywords: Transition economies; Debt problems; Economic growth; Structural adjustment; external debt; debt; current account; deficits; debt burden; current account balance; current account deficits; interest; debt dynamics; creditors; debt sustainability; debt ratios; payments; external debt statistics; external financing; loans; debt accumulation; domestic currency; official creditors; multilateral loans; debt ratio; balance of payments; debt statistics; actual debt; public debt; national debt; debt management; external debt burden; debt stocks; debt buildup; fiscal deficits; debt stock; indebted countries; fiscal policy; public and publicly guaranteed; current accounts; total external debt; private creditors; debt relief; current account balances; current account deficit; debt crises; foreign aid; debt service; debt forgiveness; taxes; public and publicly guaranteed debt; expenditures; external debt sustainability; public debt crises; debt explosions; bilateral donor; debt profile; long-term debt; highly indebted countries; debt structure; medium-term debt sustainability; external shocks; concessional debt; net debt; current account surpluses; heavily indebted countries; international lending; debt intolerance;

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References

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  1. Lionel Halpern & Charles Wyplosz, 1996. "Equilibrium Exchange Rates in Transition Economies," IMF Working Papers 96/125, International Monetary Fund.
  2. Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2003. "Debt Intolerance," NBER Working Papers 9908, National Bureau of Economic Research, Inc.
    • Reinhart, Carmen & Rogoff, Kenneth & Savastano, Miguel, 2003. "Debt intolerance," MPRA Paper 13932, University Library of Munich, Germany.
  3. R. Gaston Gelos & Ratna Sahay, 2001. "Financial market spillovers in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(1), pages 53-86, March.
  4. Stanley Fischer & Ratna Sahay, 2000. "The Transition Economies After Ten Years," IMF Working Papers 00/30, International Monetary Fund.
  5. Nauro F. Campos & Fabrizio Coricelli, 2002. "Growth in Transition: What We Know, What We Don't, and What We Should," William Davidson Institute Working Papers Series 470, William Davidson Institute at the University of Michigan.
  6. Carlos A. Végh Gramont & Ratna Sahay & Guillermo Calvo, 1995. "Capital Flows in Central and Eastern Europe," IMF Working Papers 95/57, International Monetary Fund.
  7. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
  8. Stanley Fischer & Ratna Sahay, 2000. "The Transition Economies After Ten Years," NBER Working Papers 7664, National Bureau of Economic Research, Inc.
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Cited by:
  1. Richard Pomfret, 2006. "Coordinating Aid for Regional Cooperation Projects: The Experience of Central Asia," The Institute for International Integration Studies Discussion Paper Series iiisdp163, IIIS.
  2. Junko Koeda, 2006. "A Debt Overhang Model for Low-Income Countries," IMF Working Papers 06/224, International Monetary Fund.
  3. Alex Segura-Ubiergo & Alejandro Simone & Sanjeev Gupta & Qiang Cui, 2010. "New Evidence on Fiscal Adjustment and Growth in Transition Economies," Comparative Economic Studies, Palgrave Macmillan, vol. 52(1), pages 18-37, March.

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