Bank misdefining domestic debt?

14 September 2011

At its debt sustainability conference in June, the Bank emphasised the importance of governmental use of domestic borrowing rather than international borrowing. However, UK NGO Jubilee Debt Campaign noted that the Bank’s definition of domestic debt includes foreign investors buying local currency bonds. The Bank claimed that this form of debt constitutes the largest growth in domestic debt in developing countries. Jubilee Debt Campaign argue that: “Loans in a local currency from foreign investors are still risky external debts, with interest and repayments on the debt leaving the country”.