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Debt Management in Latin America How Safe Is the New Debt Composition?

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  • Eduardo Cavallo

Abstract

While public debt ratios in Latin America increased in 2009 amid the global financial crisis, they remain below levels reached following the Asian and Russian crises of the late 1990s. Moreover, debt composition has continued to shift towards -safer- debt (domestic debt with a higher prevalence of domestic currency liabilities). However, the current debt structure poses risks and policy challenges that should not be overlooked. Reviewing the latest available data on debt levels and composition for the region`s largest countries, this brief concludes that debt managers should avoid complacency in thinking that the region is completely redeemed from old sins. Particularly overlooked is that there does not yet exist in the region a large investor base for debt denominated in domestic currency at fixed nominal rates and reasonably long maturities.

Suggested Citation

  • Eduardo Cavallo, 2010. "Debt Management in Latin America How Safe Is the New Debt Composition?," Research Department Publications 5001, Inter-American Development Bank, Research Department.
    • Handle: RePEc:idb:wpaper:5001
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    File URL: http://www.iadb.org/research/pub_hits.cfm?pub_id=IDB-PB-109&pub_file_name=pubIDB-PB-109.pdf
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "The Forgotten History of Domestic Debt," Economic Journal, Royal Economic Society, vol. 121(552), pages 319-350, May.
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    Cited by:

    1. Avellaneda-Kantt, Maria Belen, 2012. "Perspectiva Macroeconomica y Tendencias en el Mercado de Deuda Latinoamericano: ¿El viraje hacia instrumentos de Fondeo Domesticos? [Macroeconomic Outlook and Trends in Latin American Debt Capital ," MPRA Paper 44271, University Library of Munich, Germany, revised 16 Jan 2013.

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    More about this item

    Keywords

    Debt management; Public debt; Living with debt;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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