Public Debt Reporting in Developing Countries

More than 20 developing countries do not publish any data on their sovereign debt. In those thatdo disclose data, public debt statistics usually do not comply with international standards in terms of coverage anddefinitions. Some information can be deduced through indirect disclosure of debt statistics to external agents,such as the World Bank and the International Monetary Fund, and this can help minimize data gaps. This paper has twomain objectives. First, it measures the extent of transparency in direct reporting and identifies the factorsthat promote it. The results show that debt transparency is fostered by standardized recording and reporting systems,high levels of external scrutiny (for example, Eurobond issuance and ratings), and the presence of highly skilledstaff at the local debt office. Second, the paper describesthe reporting ecosystem in which two type of channels (direct and indirect) coexist and provides novel estimatesof the data gaps across the two. Cross-comparison of direct reporting and the World Bank–International Monetary FundDebt Sustainability Analysis shows that deviations in public debt stocks can represent up to 30 percent of national grossdomestic product. Based on these results, the paper puts forward a call for action to (i) improve debt transparencyby focusing on those factors that best promote transparency; (ii) shifting the focus of multilateral development banks’operations and technical assistance from indirect to direct reporting; (iii) introducing minimum but enforceableinternational standards for direct reporting; and (iv) promoting the use of modern and integrated debt recordingand reporting systems.