World Bank Document

Table 10.5 Current account balance and its financing in developing countries, 1984 and 1990
(billions of 1980 dollars)
Developing countries Low-income Asia Low-income Africa
High Low High Low High Low
Item 1984a 1990 1990 1984' 1990 1990 1984' 1990 1990
Net exports of goods and
nonfactor services 14.5 -38.6 6.3 -8.9 -19.9 -12.8 -3.9 -3.7 -3.0
Interest on medium- and
long-term debt -59.3 -44.9 -76.3 -1.9 -3.5 -4.2 -1.0 -1.0 -1.5
Official -10.8 -12.8 -18.4 -1.1 -1.4 -1.8 -0.4 -0.9 - 1.3
Private -48.5 -32.1 -57.9 -0.8 -2.1 -2.3 -0.6 -0.1 -0.2
Current account balanceb -36.4 -60.7 -48.6 -3.2 -15.7 -9.4 -4.7 -4.3 -4.2
Net official transfers 12.2 15.2 14.5 2.0 1.9 1.8 2.0 2.4 2.3
Medium- and long-term
loans, 51.3 55.1 36.6 6.7 15.7 7.4 2.1 1.9 1.8
Official 26.2 20.4 20.2 4.3 5.1 5.0 2.3 2.3 2.2
Private 25.1 34.7 16.4 2.4 10.6 2.4 -0.2 -0.4 -0.4
Debt outstanding and
disbursed 702.5 716.2 741.4 54.1 93.2 78.8 27.2 27.1 29.6
As percentage of GNP 33.8 24.7 27.8 9.7 11.9 10.3 54.6 44.6 51.5
As percentage of exports 135.4 98:2 133.1 100.0 131.0 148.4 278.1 250.3 328.1
Debt service as percentage of
exports 19.7 16.0 28.0 8.4 10.6 15.6 19.9 25.2 37.5
Note: The table is based on a sample of ninety developing countries. The GDP deflator for industrial countries was used to deflate all items. Details
may not add to totals because of rounding. Net exports in this table exclude factor services and thus differ from those in Tablet106.-eNt exports
plus interest does not equal the current account balance because of the omission of net workers' remittances, private transfers, and investment
income. The current account balance not financed by official transfers and loans is covered by direct foreign investment, other capital (including
short-term credit and errors and omissions), and changes in reserves. Ratios are calculated using current price data.
private capital and direct investment) in total flows 10.2). Total net financing flows would increase
is projected to be in 1990 similar to that in 1980. from $72 billion in 1984 to $82 billion in 1990; in
Nonconcessional private lending (mainly by com- 1980 prices, however, they would decline by 1.7
mercial banks) is projected to increase by 13.0 per- percent a year in the period 1985-90. This would be
cent a year in current prices (5.1 percent a year in the result of very slow growth of official flows and
1980 dollars). Private direct investment is projected a sharp contraction in lending by commercial
to increase by 12 percent a year in current prices banks. In the Low simulation, as in the High, ODA
(4.2 percent in 1980 dollars). from industrial countries is assumed to be 0.37 per-
Despite the increase in external finance in the cent of their GNP. However, since their GNP is
High simulation, the main debt indicators all lower in the Low simulation, ODA in 1990 is 15
improve over the period. For developing countries percent less in current dollars (or 3.7 percent less
as a group, debt outstanding as a percentage of in 1980 dollars). This would have major conseexports
declines from 135 percent in 1984 to 98 quences for low-income countries, particularly
percent in 1990, and their debt service ratio falls those in Africa. Redistributing concessional capital
from 20 to 16 percent. The prizes for achieving the among low-income countries would not be an ade-
High simulation are therefore substantial-a faster quate answer to their increased needs. Nonconcesgrowth
of output and exports, along with an sional private lending (mainly by commercial
improvement in creditworthiness and a reduction banks) is projected to increase by 13.0 percent a
in the debt-servicing burden. The improvements year in current prices (5.1 percent in 1980 dollars)
in creditworthiness lead to increases in private in the High simulation and decline by 5.0 percent a
financial flows in excess of interest payments by year in current prices (9.5 percent in 1980 dollars)
1990 in most regions. in the Low, reflecting changes in creditworthiness
By contrast, the prospects offered by the Low and the differences in real interest rates. The rate
simulation are very disturbing. Although develop- of growth in private direct investment is projected
ing countries are assumed to continue the policy to be 8.4 percent in current prices (3.2 percent in
reforms that are already in train, the less favorable 1980 dollars) in the Low. Overall, net financing
external conditions produce slower growth and flows grow more than three times faster in current
less external finance (see Table 10.6 and Figure prices in the High simulation than the Low; in 1980
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