Information about Sub-Saharan Africa África subsahariana
Chapter

IV Financing from Multilateral Institutions

Author(s):
International Monetary Fund
Published Date:
March 1998
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Recent Trends in Multilateral Lending

Total multilateral lending15 to all developing countries16 fell in 1996 (gross $42 billion; net $15 billion) after the record high level of 1995 (gross $60 billion; net $28 billion) that reflected exceptionally large IMF lending in support of Mexico and Russia (Table 4)17. After growing steadily over the last decade, multilateral lending to all developing countries has reached in gross terms nearly double the size of official bilateral lending. For low-income countries, and heavily indebted poor countries (HIPCs) in particular, multilateral lending has become the largest source of public borrowing in net terms, while middle-income countries have been increasingly relying on borrowing from private sources18. Concurrently, middle-income countries continued to receive the bulk (65 percent) of multilateral lending, amounting to $27 billion (gross), in 1996. However, reflecting the higher share of concessional lending, which is generally of longer maturity and therefore involves smaller repayments, low-income countries received about half of net disbursements from multilateral institutions.

Table 4.Developing Countries: Gross and Net Disbursements on Public External Debt by Analytical Group and Creditor(In billions of U.S. dollars)
Gross DisbursementsNet Disbursements
Annual averageProv.Annual averageProv.
1985–891990–941994199519961985–891990–94199419951996
All developing countries195.3115.2114.1156.9158.735.438.230.361.349.6
Multilateral25.136.737.459.941.89.815.012.027.815.2
Official bilateral18.222.320.632.821.38.99.63.112.9-5.0
Private52.056.256.164.295.616.713.615.220.639.4
Middle-income countries266.279.077.0114.8118.817.318.213.146.738.4
Multilateral15.922.822.544.127.14.76.23.221.48.0
Official bilateral11.315.214.223.115.14.45.90.98.8-5.8
Private39.041.040.347.676.68.26.19.016.536.2
Low-income countries329.336.137.142.339.818.120.017.114.711.3
Multilateral9.313.814.915.814.75.18.88.76.47.3
Official bilateral6.97.16.49.86.24.53.72.24.20.8
Private13.115.215.816.718.98.57.56.24.13.2
Heavily indebted poor countries411.29.58.610.29.06.44.63.83.11.9
Multilateral4.55.76.57.86.22.53.23.83.33.1
Official bilateral3.82.41.51.61.72.91.40.50.3-0.1
Private2.91.40.60.81.11.0-0.5-0.5-1.1
Memorandum items
Private nonguaranteed debt5
All developing countries17.431.747.258.867.0-1.615.922.331.137.6
Middle-income countries26.430.345.555.960.4-1.615.421.629.032.3
Low-income countries31.01.41.72.96.60.50.72.15.3
Heavily indebted poor countries40.60.40.40.20.8-0.10.10.3
Sources: World Bank Debtor Reporting System (DRS); and IMF, International Financial Statistics (various issues).Note: Disbursements on medium- and long-term public and publicly guaranteed debt, including to the IMR Differences in coverage and definitions make the World Bank data presented in this table incompatible with OECD data.

A group of 136 countries reporting to the DRS.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank.

For the 41 countries covered, see Table A3.

Only 31 DRS reporting countries report their private nonguaranteed debt to the DRS; World Bank estimates debt for 29 other DRS reporting countries for which this type of debt is known to be significant.

Sources: World Bank Debtor Reporting System (DRS); and IMF, International Financial Statistics (various issues).Note: Disbursements on medium- and long-term public and publicly guaranteed debt, including to the IMR Differences in coverage and definitions make the World Bank data presented in this table incompatible with OECD data.

A group of 136 countries reporting to the DRS.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank.

For the 41 countries covered, see Table A3.

Only 31 DRS reporting countries report their private nonguaranteed debt to the DRS; World Bank estimates debt for 29 other DRS reporting countries for which this type of debt is known to be significant.

Gross disbursements to ail developing countries from multilateral institutions other than the IMF continued to increase modestly, to reach $33 billion in 1996, while net disbursements recovered to $15 billion from the lower level in 1994–95 that reflected large repayments by middle-income countries (Table 5). At the same time, IMF flows turned from substantial net repayments in the second half of the 1980s to positive net flows in the 1990s; after a surge in 1995, gross (net) disbursements amounted to $8.7 (0.7) billion in 1996. Thus, total net multilateral lending to all developing countries has stepped up, although with year-to-year fluctuations, from an annual average of $10 billion in 1985–89 to $15 billion in the 1990s and a peak of $28 billion in 1995 (Figure 11). For HIPCs, multilateral net disbursements fluctuated at about $3–4 billion over the last decade, in contrast to net lending from official bilateral and private sources, which has declined sharply since 1993. Most HIPCs continued to receive positive net disbursements from multilateral institutions in 1996 (Table A3), except for countries not undertaking adjustment policies (Democratic Republic of Congo, Liberia, and Myanmar) or those with an interrupted adjustment program (Honduras).

Table 5.Developing Countries: Gross and Net Disbursements from Multilateral Institutions by Analytical Group and Concessionality
Gross DisbursementsNet Disbursements
Annual averageProv.Annual averageProv.
1985-891990-941994199519961985-891990-94199419951996
(In billions of U.S. dollars)
All developing countries125,11036,65737,37459,93841,7719,82315,00811,92827,79115,273
IMF4,6137,9028,40127,9148,681-2,7671,3431,57316,781743
Other20,49728,75528,97332,02433,09012,59013,66510,35511,01014,530
Concessional6,2209,50311,45312,19811,5594,8037,6939,2949,4668,629
Of which: IMF24808411,3032,1711,029-816479841,604325
Nonconcessional18,89027,15425,92147,74030,2125,0207,3152,63418,3256,644
Middle-income countries315,85722,82922,46844,12827,1124,6696,2313,21021,3717,974
IMF3,3565,7896,66824,2277,295-1,3989161,63817,6001,785
Other12,50117,04015,80019,90119,8176,0675,3151,5723,7716,189
Concessional1,0361,7521,9982,4971,9214859541,1541,470959
Of which: IMF22537492649-1132432-413
Noneoncessional14,82121,07720,47041,63125,1914,1845,2772,05619,9017,015
Low-income countries49,25313,82714,90615,81114,6595,1558,7788,7206,4217,299
IMF1,2572,1131,7333,6881,386-1,368427-64-819-1,042
Other7,99611,71413,17312,12313,2736,5238,3518,7847,2408,341
Concessional5,1857,7509,4559,7029,6384,3176,7398,1417,9977,670
Of which: IMF24568041,2542,146980316239521,609312
Nonconcessional4,0686,0775,4516,1095,0218382,039579-1,576-371
Heavily indebted poor countries54,5115,6296,5227,8746,2072,4873,2053,8663,2553,135
IMF8056511,0123,025974-29716524575312
Other3,7064,9785,5104,8495,2332,7843,1893,3422,6802,823
Concessional2,6663,9724,9985,8755,0842,2473,4024,1984,8973,906
Of which: IMF23054897862,0108241393975721,651367
Nonconcessional1,8451,6571,5241,9991,123240-197-332-1,642-771
(in percent)
Concessional share in disbursements
All developing countries125263120284951783457
Middle-income countries378967101536712
Low-income countries45656636166847793125105
Heavily indebted poor countries5597177758290106109150125
Sources: World Bank Debtor Reporting System (DRS); and IMF, International Financial Statistics (various issues).Note: Disbursements on medium- and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

SAF, ESAF, and Trust Fund.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank.

For the 41 countries covered, see Table A3.

Sources: World Bank Debtor Reporting System (DRS); and IMF, International Financial Statistics (various issues).Note: Disbursements on medium- and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

SAF, ESAF, and Trust Fund.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank.

For the 41 countries covered, see Table A3.

Figure 11.Developing Countries: Net Disbursements on Public External Debt by Creditor

(In billions of U.S. dollars)

Sources: World Bank Debtor Reporting System; and IMF, International Financial Statistics (various issues).

Note: Net disbursements are on medium- and long-term public and publicly guaranteed debt, including to the IMF.

1The estimates for 1996 are provisional.

Multilateral lending on concessional terms to developing countries increased steadily over the last decade notwithstanding somewhat lower flows in 1996 (gross $12 billion and net $9 billion; Table 5). Concessional lending reached close to 60 percent of net disbursements in 1996. For HIPCs, the concessional share in gross multilateral disbursements has risen steadily from less than 60 percent in 1985–89 to more than 80 percent in 1996. For low-income countries, and HIPCs in particular, concessional resources have been used to repay nonconcessional debt to multilateral institutions in the 1990s—as reflected in net concessional lending of over 100 percent of net disbursements in 1995 and 1996.

Recent changes in the regional allocation of multilateral disbursements reflected the exceptional lending pattern in 1995 (Table 6 and Table A4). A major development over the last decade was the reversal of flows to Europe and Central Asia—from net outflows in the second half of the 1980s to inflows reaching over 40 percent of net multilateral lending in 1996—reflecting the assistance provided to reforming transition economies. At the same time, the share of lending to countries in the Western Hemisphere (except for 1995) and South Asia dropped sharply from about 50 percent of total flows in 1985–89 to 12 percent in 1996 as Latin American countries increasingly used private funding sources, and India started to make substantial net payments to tine IMF after 1993.

Table 6.Developing Countries: Gross and Net Disbursements from Multilateral Institutions by Region
Gross DisbursementsNet Disbursements
Annual averageProv.Annual averageProv.
1985–891990–941994199519961985–891990–94199419951996
(In millions of U.S. dollars)
All developing countries125,10936,65637,37459,93941,7729,82415,00911,92827,79115,274
IMF4,6137,9018,40027,9158,682-2,7661,3431,57316,781744
Other20,49628,75528,97432,02433,09012,59013,66610,35511,01014,530
Sub-Saharan Africa4,3235,3195,8977,3545,7122,3343,1103,4452,9242,904
IMF8095959182,994652-335-845258155
Other3,5144,7244,9794,3605,0602,6693,1182,9932,3432,849
North Africa and the Middle East2,1963,1063,7523,7164,0049911,0831,5571,2831,611
IMF38837493559098538-49529200648
Other1,8082,7322,8173,1263,0199531,1321,0281,083963
East Asia and the Pacific4,1035,5256,2196,3266,2872,1182,2412,2672,8402,631
IMF588270275203195-192-367-26-188-119
Other3,5155,2555,9446,1236,0922,3102,6082,2933,0282,750
South Asia3,7726,0165,3804,1054,9031,8473,8042,197-1171,180
IMF3421,348520202156-1,027484-794-1,794-1,584
Other3,4304,6684,8603,9034,7472,8743,3202,9911,6772,764
Western Hemisphere8,53510,4897,85225,71410,7143,0861,042-1,72914,486581
IMF2,3122,5751,16615,7721,477-134-711-1,27612,878-1,951
Other6,2237,9146,6869,9429,2373,2201,753-4531,6082,532
Europe and Central Asia2,1806,2018,27412,72410,152-5523,7294,1916,3756,367
IMF1742,7394,5868,1545,217-1,1161,9942,6885,1043,695
Other2,0063,4623,6884,5704,9355641,7351,5031,2712,672
(In percent of total)
Sub-Saharan Africa17.214.515.812.313.723.820.728.910.519.0
North Africa and the Middle East8.78.510.06.29.610.17.213.14.610.5
East Asia and the Pacific16.315.116.610.615.121.614.919.010.217.2
South Asia15.016.414.46.811.718.825.318.4-0.47.7
Western Hemisphere34.028.621.042.925.631.46.9-14.552.13.8
Europe and Central Asia8.716.922.121.224.3-5.624.835.122.941.7
Sources: World Bank Debtor Reporting System (DRS); and IMF, International Financial Statistics (various issues).Note: Disbursements on medium- and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

Sources: World Bank Debtor Reporting System (DRS); and IMF, International Financial Statistics (various issues).Note: Disbursements on medium- and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

Multilateral Debt Service

Notwithstanding the buildup of multilateral debt, the multilateral debt-service ratio for all developing countries has gradually declined by a cumulative 2½ percentage points since the mid-1980s to reach 3 percent of exports of goods and services in 1996 (Figure 12 and Table 7). This trend reflects the increased share of concessional lending. For HIPCs, the multilateral debt-service ratio declined to 7 percent in 1996 from 9–10 percent in 1986–9119.

Figure 12.Developing Countries: Debt-Service Payments on Multilateral Debt

(In percent of exports of goods and services)

Sources: World Bank Debtor Reporting System; and IMF, Treasurer’s Department.

1The estimates for 1996 are provisional.

Table 7.Developing Countries: Multilateral Debt Service
Annual AverageProv.
1985–891990–94199419951996
(In millions of U.S. dollars)
Multilateral debt service
All developing countries125,62436,17140,65548,64143,668
Middle-income countries219,04227,54230,48434,82531,935
Low-income countries36,5828,62910,17113,81611,733
Heavily indebted poor countries43,2514,0324,2846,4644,714
(In percent of exports of goods and services)
Multilateral debt-service ratio
All developing countries15.84.64.04.03.3
Middle-income countries25.74.53.93.83.2
Low-income countries36.14.74.34.93.7
Heavily indebted poor countries49.48.58.911.57.3
(In percent of exports of goods and services)
Memorandum items
Multilateral debt
All developing countries142.534.531.228.927.3
Middle-income countries234.425.422.321.520.2
Low-income countries367.464.760.453.150.0
Heavily indebted poor countries4103.7115.1129.9120.1109.3
Sources: World Bank Debtor Reporting System (DRS); IMF, International Financial Statistics (various issues); and IMF, Treasurer’s Department.Note: Debt service on medium- and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank.

For the 41 countries covered, see Table A3.

Sources: World Bank Debtor Reporting System (DRS); IMF, International Financial Statistics (various issues); and IMF, Treasurer’s Department.Note: Debt service on medium- and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank.

For the 41 countries covered, see Table A3.

Middle-income countries made net transfers of about 1 percent of exports of goods and services to multilateral institutions over the last decade (Table 8). In contrast, low-income countries continued to receive positive net transfers, although the level declined over the decade. For HIPCs, the level of net transfers in relation to exports fell slightly from 3½ percent in 1985–89 to 2½ percent in 1995–96.

Table 8.Developing Countries: Multilateral Net Transfers
Annual AverageProv.
1985–891990–94199419951996
(In millions of U.S. dollars)
All developing countries1-514486-3,28111,298-1,897
IMF-5,374-969-19714,092-1,728
Other4,8601,455-3,084-2,794-169
Middle-income countries2-3,186-4,713-8,0169,303-4,823
IMF-3,205-88328815,691-333
Other19-3,830-8,304-6,388-4,490
Low-income countries32,6715,1974,7361,9952,926
IMF-2,169-87-484-1,599-1,395
Other4,8405,2845,2203,5944,321
Heavily indebted poor countries41,2601,5962,2381,4101,493
IMF-630-18238964193
Other1,8901,7781,8491,3461,300
(In percent of exports of goods and services)
Memorandum items
All developing countries1-0.10.1-0.30.9-0.1
Middle-incomecountries2-0.9-0.7-1.01.0-0.5
Low-income countries32.52.92.00.70.9
Heavily indebted poor countries43.63.34.62.52.3
Sources: World Bank Debtor Reporting System (DRS); IMF, International Financial Statistics (various issues); and IMF, Treasurer’s Department.Note: Gross disbursements less debt service (principal and interest) on medium-and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank.

For the 41 countries covered, see Table A3.

Sources: World Bank Debtor Reporting System (DRS); IMF, International Financial Statistics (various issues); and IMF, Treasurer’s Department.Note: Gross disbursements less debt service (principal and interest) on medium-and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank.

For the 41 countries covered, see Table A3.

Multilateral Debt

The share of multilateral debt in the total debt of developing countries increased modestly by 3 percentage points during the first half of the 1990s to reach 26 percent at end-1996 (Figure 13 and Table 9). For HIPCs, the share reached 34 percent at end-1996, up from 26 percent at end-1990, reflecting in part continued support from multilaterals; bilateral debt forgiveness, particularly of official development assistance claims; increasing use by bilaterals of grant (rather than loan) finance; and a withdrawal by private creditors. In contrast, for middle-income countries, the share of multilateral debt remained broadly unchanged at about 20 percent during the first half of the 1990s. For all developing countries, the share of concessional debt in total multilateral debt has risen by 6 percentage points over the last decade to reach 36 percent at end-1996 (Table 10); for HIPCs, the share has risen from less than one-half to more than three-fourths over the same period. IMF concessional debt constituted about 8½ percent of the multilateral concessional debt of HIPCs (Table A5).

Figure 13.Developing Countries: Public External Debt by Creditor

(In billions of U.S. dollars)

Sources: World Bank Debtor Reporting System; and IMF, International Financial Statistics (various issues).

Note: Medium- and long-term public and publicly guaranteed debt, including to the IMF.

1The estimates for 1996 are provisional.

Table 9.Developing Countries: Medium- and Long-Term Public External Debt by Creditor
Prov.
19851990199419951996
(In billions of U.S. dollars)
Public external debt
All developing countries17031,0691,3281,3821,414
Middle-income countries2543723894935965
Low-income countries3160346434447449
Heavily indebted poor countries492186203209206
(In percent of group total)
All developing countries1
Multilateral19.922.323.825.325.6
IMF5.43.23.34.44.2
Other14.519.120.620.921.4
Official bilateral25.932.137.436.234.4
Private54.245.538.838.540.0
Middle-income countries2
Multilateral15.819.419.321.321.2
IMF4.33.23.14.94.8
Other11.416.216.216.316.5
Official bilateral21.926.435.634.032.1
Private62.354.245.144.746.7
Low-income countries3
Multilateral34.128.633.133.635.0
IMF9.13.43.53.23.0
Other25.025.229.730.432.0
Official bilateral39.344.041.140.839.3
Private26.627.425.825.525.7
Heavily indebted poor countries4
Multilateral28.026.230.932.334.0
IMF7.23.73.63.83.9
Other20.822.627.328.430.1
Official bilateral41.253.153.953.452.2
Private30.920.715.214.313.8
Sources: World Bank Debtor Reporting System (DRS); and IMF, International Financial Statistics (various issues).Note: Medium- and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank.

For the 41 countries covered, see Table A3.

Sources: World Bank Debtor Reporting System (DRS); and IMF, International Financial Statistics (various issues).Note: Medium- and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank.

For the 41 countries covered, see Table A3.

Table 10.Developing Countries: Multilateral Debt on Concessional Terms
Prov.
19851990199419951996
(in millions of U.S. dollars)
Total multilateral debt
All developing countries1140,197238,856316,364348,986362,165
Middle-income countries285,514139,994172,585198,680204,817
Low-income countries354,68398,862143,779150,306157,349
Heavily indebted poor countries425,77048,71462,73667,43470,197
Multilateral concessional debt
All developing countries142,31276,197111,888122,416130,003
Middle-income countries211,03113,96318,55120,54320,950
Low-income countries331,28162,23493,337101,872109,053
Heavily indebted poor countries412,64330,04011,28150,00853,479
(In percent of total multilateral debt)
Multilateral concessional debt
All developing countries130.231.935.435.135.9
Middle-income countries212.910.010.710.310.2
Low-income countries357.263.064.967.869.3
Heavily indebted poor countries449.161.770.674.276.2
(In millions of U.S. dollars)
Memorandum items
SAF/ESAF/Trust Fund
All developing countries12,6913,6596,7878,4838,529
Middle-income countries2532178306308311
Low-income countries32,1593,4816,4818,1758,218
Heavily indebted poor countries48662,4744,1295,8225,996
(In percent of multilateral concessional debt)
SAF/ES AF/Trust Fund
All developing countries16.44.86.16.96.6
Middle-income countries24.81.31.71.51.5
Low-income countries36.95.66.98.07.5
Heavily indebted poor countries46.88.29.311.611.2
Sources: World Bank Debtor Reporting System (DRS); and IMF, International Financial Statistics (various issues).Note: Medium- and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank

For the 41 countries covered, see Table A3.

Sources: World Bank Debtor Reporting System (DRS); and IMF, International Financial Statistics (various issues).Note: Medium- and long-term public and publicly guaranteed debt, including to the IMF.

A group of 136 countries reporting to the DRS.

A group of 75 DRS reporting countries for which 1995 GNP per capita was between $766 and $9,386 as calculated by the World Bank.

A group of 61 DRS reporting countries for which 1995 GNP per capita was no more than $765 as calculated by the World Bank

For the 41 countries covered, see Table A3.

Box 3.Coverage of Multilateral Institutions

In addition to the IMF, which is a monetary rather than a development institution, the major multilateral lenders in order of size of lending are the World Bank, comprising both the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA);1 the three regional development banks:2 the African Development Bank (AfDB), the Asian Development Bank (AsDB), and the Inter-American Development Bank (IDB); and a group of European multilateral institutions primarily associated with die European Union, 3 such as the European Investment Bank (EIB).

The European Bank for Reconstruction and Development (EBRD)4 and the International Fund for Agricultural Development (IFAD) are also multilateral institutions with wider membership, but with a relatively small size of lending. Other multilateral lenders include institutions based in Arab countries (e.g., Arab Fund for Economic and Social Development, the Fund for International Development of the Organization of Petroleum Exporting Countries, and the Islamic Development Bank) and a large number of subregional organizations (e.g., Central American Bank for Economic Integration (CABEI), and Corporación Andina de Fomento (CAF)).

The EIB has unique features as the development financing institution of the European Union (EU). It provides long-term finance for capital projects both inside and outside the EU. Outside the EU, its financing operations involve countries with which it has concluded cooperation agreements and are conducted either from its own resources or, under mandate, from EU or member states’ budgetary resources. For the Central and Eastern European countries, support has been provided within the framework of the Group of Twenty-Four, Lending operations from EU or member stales’ budgetary resources are more of a bilateral nature, but are not shown separately in the Debtor Reporting System.

1The World Bank, together with the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Center for the Settlement of Investment Disputes (ICSID), forms the World Bank Group. These institutions are separate legal entities established by the respective international agreements. The IFC and MIGA play an important role in supporting the private sector in developing countries by complementing the support provided by the IBRD and IDA, while the ICSID provides a forum to resolve cross-border investment disputes rather than financial resources.2The three regional development banks have affiliated institutions and/or special funds established for specific purposes. For example, the AsDB has the Asian Development Fund (ADF), which provides loans on concessional terms; and the IDB has the Inter-American Investment Corporation (TIC) as an autonomous affiliate and the Multilateral Investment Fund (MIF), both of which were established to support private sector development directly. The African Development Fund (AfDF) is a legal entity separate from the AfDB that provides loans on concessional terms.3The World Bank Debtor Reporting System distinguishes between the Council of Europe, the European Community (EC), European Development Fund (EDF), and the European Investment Bank (EIB).4While all EU members as well as the EIB and the European Community are shareholders of the EBRD, the membership also includes a number of non-European countries.

The creditor composition of multilateral debt has remained broadly unchanged over the recent past, although the exceptional lending in 1995 slightly increased the share of the IMF and reduced that of the World Bank. The World Bank remained the largest multilateral creditor in 1996, with its share in total multilateral debt of developing countries exceeding 50 percent; IDA’s relative share has increased in recent years to over 20 percent (Table 11). The three main regional development banks together accounted for 23 percent of total multilateral debt in 1996—their share has risen by nearly 10 percentage points over the last decade. The IMF accounted for 16 percent of total multilateral debt, European institutions for 4 percent, and other multilateral institutions for the remainder.

Table 11.Developing Countries: Multilateral Debt by Institution
Prov.
19851990199419951996
(In billions of U.S. dollars)
Total140.2238.9316.4349.0362.2
World Bank70.8137.3174.3183.4188.0
IBRD46.692.3107.9111.9109.6
IDA24.245.066.471.578.3
Regional development banks119.245.071.076.683.2
AfDB and AfDF2.18.215.516.917.8
AsDB5.115.127.128.732.0
IDB12.121.728.431.033.4
European institutions3.58.913.914.153.4
EIB and EDF2.46.110.610.910.5
Other21.12.83.33.32.9
IMF38.234.743.360.259.5
Others8.413.013.814.718.2
(In percent of total)
World Bank50.557.555.152.651.9
IBRD33.238.734.132.130.3
IDA17.318.821.020.521.6
Regional development banks113.718.822.521.923.0
AfDB and AfDF1.53.44.94.84.9
AsDB3.66.38.68.28.8
IDB8.69.19.08.99.2
European institutions2.53.74.44.03.7
EIB and EDF1.72.53.33.12.9
Other20.81.21.10.90.8
IMF27.214.513.717.216.4
Others6.15.44.44.25.0
Sources: World Bank Debtor Reporting System (DRS): IMF, International Financial Statistics (various issues): and IMF staff estimates.Note: Medium- and long-term public and publicly guaranteed debt, including to the IMF.

Including development funds and other associated concessional facilities.

Council of Europe and European Community.

Sources: World Bank Debtor Reporting System (DRS): IMF, International Financial Statistics (various issues): and IMF staff estimates.Note: Medium- and long-term public and publicly guaranteed debt, including to the IMF.

Including development funds and other associated concessional facilities.

Council of Europe and European Community.

For HIPCs, the share of the World Bank in total multilateral debt increased from 47 percent in 1985 to 55 percent in 1996 (Table A5). The share of IDA debt increased from 26 percent to 46 percent over the same period, and that of IBRD debt fell from 21 percent to 9 percent, reflecting the continued move toward concessional lending to these countries. The share of concessional resources in overall World Bank Group exposure to HIPCs rose from 55 percent in 1985 to 84 percent in 1996. The share of the three major regional development banks in total HIPC debt nearly doubled over the same period to 21 percent; however, the share of their debt on concessional terms declined slightly to 62 percent.

IDA continued to be the largest source for concessional multilateral lending, accounting for 58 percent of such debt as of the end of 1995 (Table 12). The three main regional development banks held 22 per cent of concessional loans, and the IMF held 7 percent; the remainder was shared by the European institutions and other multilateral institutions.

Table 12.Composition and Average Terms of Multilateral Debt by Major Institutions
Average Terms of New Commitments in 1995
Debt OutstandingGrant element using

discount rate of1
AmountShare of total
1986199519861995InterestMaturityGrace10%CIRRs2
(In millions of U.S. dollars)(In percent)(In percent)(In years)(In percent)
Concessional debt49,046122,416100.0100.02.4227.57.956.754.2
IDA27,96271,54957.058.40.7537.810.279.874.5
AsDB2,75115,0285.612.33.8438.710.252.640.7
AfDF1,3326,5172.75.30.7550.016.285.284.3
IDB3,6315,0147.44.11.8139.510.371.070.7
European Investment Bank7082,4791.42.04.2121.66.437.739.0
Arab Fund for Economic and Social Development8502,3941.72.04.3624.96.440.740.0
International Fund for Agricultural Development9922,2012.01.81.5735.48.669.070.0
European Development Fund1,0892,1222.21.70.8137.99.678.478.4
OPEC Fund1,2018312.40.72.4215.95.145.944.6
IBRD1,7167843.50.65.9619.85.426.214.9
Islamic Development Bank3927820.80.61.7022.85.958.758.2
Council of Europe2357280.50.6
AfDB835710.20.52.5614.74.030.323.1
Other3,6592,9327.52.42.7822.46.949.349.2
IMF (SAF/ESAF/Trust Fund)2,4458,4835.06.90.505.510.051.837.9
Nonconcessional debt120,078227,106100.0100.07.7214.53.812.80.5
IBRD61,707111,10951.448.97.0317.35.017.66.3
IDB11,17125,9429.311.46.6321.34.921.711.5
AsDB3,08213,7072.66.06.9021.44.419.43.1
AfDB1,4689,7771.24.36.5926.73.812.613.2
European Investment Bank1,2776,2571.12.86.0613.85.321.84.1
Council of Europe9862,2060.81.0
Central American Bank for Economic Integration3521,0720.30.57.768.92.08.21.2
EBRD9350.46.4812.63.516.41.1
Corporación Andina de Fomento1457580.10.38.329.52.05.6-1.2
Islamic Development Bank2386080.20.37.066.92.07.33.6
Other3,7082,4903.11.18.918.62.44.5-8.8
IMF (General Resources Account)35,94452,24529.923.04.865.83.420.08.0
Sources: World Bank Debtor Reporting System (DRS); OECD Press Releases: Annual Reports of the World Bank, AfDB/AfDF, AsDB, and IDB: and IMF staff estimates.Note: Multilateral debt (including to the IMF) of a group of 136 countries reporting to the DRS. Major institution is defined as one with $0.5 billion or more outstanding at end-1995.

For the purpose of calculating the grant element, loans are assumed to be repaid in equal semiannual installments of principal, and the grace period is defined as the interval to first repayment minus one payment period.

Commercial interest reference rates. For the World Bank and the main regional developments banks (AfDB/AfDF and IDB), the CIRR-based discount rate is derived from the weighted average of average CIRRs in 1995 for the top five currencies in which the outstanding loans are repayable. For the other institutions, average CIRRs in 1995 for either U.S. dollar, ECU, or SDR are used. A margin reflecting longer repayment periods was added (0.75 percentage points for repayment period of less than 15 years, 1.0 percentage points for 15–20 years. 1.15 percentage points for 20–30 years, and 1.25 percentage points for over 30 years).

Sources: World Bank Debtor Reporting System (DRS); OECD Press Releases: Annual Reports of the World Bank, AfDB/AfDF, AsDB, and IDB: and IMF staff estimates.Note: Multilateral debt (including to the IMF) of a group of 136 countries reporting to the DRS. Major institution is defined as one with $0.5 billion or more outstanding at end-1995.

For the purpose of calculating the grant element, loans are assumed to be repaid in equal semiannual installments of principal, and the grace period is defined as the interval to first repayment minus one payment period.

Commercial interest reference rates. For the World Bank and the main regional developments banks (AfDB/AfDF and IDB), the CIRR-based discount rate is derived from the weighted average of average CIRRs in 1995 for the top five currencies in which the outstanding loans are repayable. For the other institutions, average CIRRs in 1995 for either U.S. dollar, ECU, or SDR are used. A margin reflecting longer repayment periods was added (0.75 percentage points for repayment period of less than 15 years, 1.0 percentage points for 15–20 years. 1.15 percentage points for 20–30 years, and 1.25 percentage points for over 30 years).

Lending Terms

Lending terms have changed little in recent years. The World Bank and the three main regional development banks charge variable interest rates on nonconcessional resources, based on the cost of funding plus a margin determined on the basis of a targeted net income. Concessional resources are generally provided to eligible countries through special windows, and fixed service charges are applied instead of interest. Maturity and grace periods vary, generally depending on the income level of the recipient country; nonconcessional loans are typically for 10-30 years, while concessional loans are for up to 40-50 years. In comparison, maturities of IMF concessional resources are shorter at 5½–10 years; nonconcessional European Union (EU) loans have maturities of about 5 years and are often repayable in bullet payments at maturity.

Actual commitments in 1995 had an average maturity (grace period) of 28 (8) years for concessional loans, and 15 (4) years for nonconcessional lending (Table 12). The grant element of concessional lending averaged 54 percent when compared with market interest rates, but differed considerably among major multilateral institutions. Based on the commercial interest reference rates (CIRRs) calculation method, the grant element of (DA credits is 75 percent and that of ESAF resources is 38 percent.

Multilateral lenders are directing their support increasingly toward private sector development in recognition of private sector activity as the main engine of growth. They use a number of financial instruments, in part to help mobilize private financial flows to developing countries.

Multilateral Institutions’ Support of Private Sector Development

Multilateral institutions are increasingly focusing on supporting private sector development and privatization, recognizing the private sector as the main engine of growth. While multilateral institutions have limited direct involvement because of resource constraints, their role is mainly catalytic through the mobilization of private financial flows to the private sector in developing countries.

World Bank assistance to the financial, power, telecommunication, oil and gas, and industrial and mining sectors, where private sector enterprises are more active, totaled $5.6 billion in its fiscal year 1996 (ended June 1996). World Bank operations were in many cases designed to support structural changes to create an enabling environment for private investment and to leverage private capital flows. The International Finance Corporation (IFC) approved financing of $3.2 billion for more than 250 projects in fiscal year 1996 compared with $2.9 billion in fiscal year 1995, which was complemented by $4.9 billion in the form of loan syndications and the underwriting of securities issues and investment funds. Also, the World Bank has become active during the past decade through loans and guarantee operations to support the private provision of infrastructure.

The Inter-American Development Bank opened a private sector lending window in 1994 that provides direct lending to private sector entities without government guarantees. Financing through the window was $198 million in 1996, together with $238 million provided by commercial banks under cofinancing arrangements. The Inter-American Investment Corporation has been providing direct support to the private sector since 1989. The Multilateral Investment Fund was entrusted by its members to promote private sector investment and began operations in 1993. The Asian Development Bank also provides assistance in the form of loans without government guarantees ($156 million in 1996) and equity investments ($107 million).

The European Bank for Reconstruction and Development (EBRD) has the specific goal of assisting the countries of Central and Eastern Europe, the Baltic countries, Russia, and the other countries of the former Soviet Union to develop into market-oriented economies. The primary targets of its financing are private companies or state-owned enterprises undergoing privatization and newly created companies. The EBRD is guided by the statutory requirements that its commitments to the public sector amount to not more than 40 percent of its total commitments on an overall and individual country basis.

Nontraditional Financial Instruments Used by Multilateral Institutions

While loans to the public sector remain the principal tool in the operations of multilateral institutions, financial instruments other than such loans have been developed to meet the growing needs for private sector development and privatization and to leverage private capital flows, reflecting the recognition of the private sector as the main engine of growth. The following financial instruments are used by the World Bank Group and the major regional development banks:

Direct lending to the private sector. Some multilateral institutions have established either an affiliated institution specialized in direct lending to the private sector without government guarantees or a window for such operations. For example, the International Finance Corporation provides loans directly to private sector entities essentially on commercial terms without government guarantees, and the Asian Development Bank and the Inter-American Development Bank opened windows for direct private sector lending (see above).

Equity and quasi-equity participation. Some multilateral institutions undertake equity or quasi-equity investments in various forms, including subscriptions to ordinary shares or preferred shares, subordinated loans, debentures, and underwriting of a share issue. Since it is not their objective to take a controlling interest in, or direct responsibility for, managing enterprises, multilateral institutions are usually required to take only a minority position and to have an exit strategy.

Guarantees. Guarantee operations are designed to enhance market access for projects and thus help the borrowing country mobilize private sector resources by reducing private lenders’ exposure to risks. Multilateral institutions often provide partial risk and partial credit guarantees.20 Partial risk guarantees cover risks arising from nonperformance of sovereign contractual obligations; risks typically covered include foreign currency convertibility, nondelivery of inputs and/or nonpayment for output, nonperformance of contracts backed by the government, and changes in the regulatory environment or political force majeure; government counter-guarantees are required in most cases.

Partial credit guarantees cover all events of nonpayment of a designated part of the debt service. These guarantees encourage the transformation of shorter-term financing to longer maturities than typically provided by private lenders.

Cofinancing and syndication. Cofinancing and syndication play an important role in mobilizing financial resources from other institutions, both official and private. Potential sources include commercial banks, other international financial institutions, and export credit agencies. Under a syndicated loan, a multilateral institution remains the lender of record for the borrower, and participating private lenders indirectly benefit from the multilateral institutions’ umbrella of protection.

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