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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. Related articles in WIKIPEDIA: Domestic liability dollarization
Instruction Manual for Version 2.0 of the IDB Debt Sustainability Template. The updated Template includes a new interface, more analytical functions, and greater flexibility for the researcher. (View publication)
The recent financial crisis has initiated pressures for not only policy reform but also fundamental institutional fiscal reforms. This paper explores the connection between economic crises and fiscal institutional reforms in a region that has experienced plenty of both in recent years, namely Latin America. For that purpose it reviews the literature and provides five hypotheses about why, and unde ... (View publication)
Deeper financial integration is expected to enable low-saving countries to increase domestic investment but also to increase crisis risks by facilitating the accumulation of risky foreign liabilities. This paper explores the connections between financial integration, investment and crisis risk to assess this tradeoff. It confirms expectations but also finds that the accumulation of safe foreign as ... (View publication)
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