Improving Public Debt Management
In the OIC Member Countries
28
multilateral and intergovernmental agencies and governments. The maturity of new contracts
is significantly larger in lowincome countries than in middleincome countries, which might
be explained by the larger share of official creditors in lowincome countries.
Figure 2-9: Maturity of New External Public Debt Commitments Worldwide
Sources: World Bank (2016) International Debt Statistics, calculations by the Ifo Institute.Interest Rate Risk
Interest rate typesLongterm debt allows governments to reliably forecast and plan the costs of outstanding debt
in the medium term. However, this only holds if interest rates are fixed. If interest rates are
variable, e.g. reset annually, longterm contracts reduce the rollover risk, but not the risk of
rising costs of debt. Figure 210 shows the share of loans with fixed interest rates in total loans.
Since 2000, lowincome countries have relied almost exclusively on loans with fixed rates.
Albeit small, the share of variable rate contracts is highest in highincome countries. The
classification by regions shows a convergence to fixed interest rates over the past 15 years.
Latin America, which relied on a significant share of loans with variable interest rates until the
mid1990s, has moved to fixed rate financing. The sharp drop in the share of fixed rate loans in
South Asia in the second half of the 1990s can be explained by the Asian financial crisis of
1997/98. When credit ratings had improved afterwards, these countries retuned to fixed rate
financing.
5
10
15
20
25
30
In years
1980 1985 1990 1995 2000 2005 2010 2015
Year
All Official creditors Private creditors
15
20
25
30
In years
1980 1985 1990 1995 2000 2005 2010 2015
Year
All Low income
Middle income
10
15
20
25
30
35
In years
1980 1985 1990 1995 2000 2005 2010 2015
Year
All East Asia, Pacific
Europe, Central Asia Latin America & Carib.
MENA North America
South Asia Sub-Saharan Africa