Improving Sovereign Financing Conditions Through Data Transparency

Abstract

IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Making Debt Public Debt—Ongoing Initiatives and Reform Options

“…Recent IMF research shows that increased fiscal and public debt transparency can more than pay for itself by meaningfully lowering emerging markets' bond spreads and increasing foreign investors' willingness to hold EM sovereign debt (Choi and Hashimoto, 2018;Kemoe and Zhan, 2018). Gonzalez-Garcia (2022) presents further evidence of significant reduction in sovereign spreads across countries following improvements in their data transparency practices through subscription to the IMF Special Data Dissemination Standard (SDDS) or dissemination of recommended macrofinancial data by countries participating in the Enhanced General Data Dissemination System (e-GDDS). Public debt transparency also promotes a diversified investor base and therefore greater access to finance (see Chapter I in the accompanying Background Paper).…”

Making Public Debt Public—Ongoing Initiatives and Reform Options—Background Paper

“…Greater data transparency reduces information asymmetries and uncertainty about economic developments and prospects, which in turn should translate into lower riskiness markets attach to more transparent countries, reducing their financing costs. The question of whether transparency is rewarded by financial markets has been a focus of many studies which indeed find a favorable effect of transparency on countries' financing conditions as evidenced in lower sovereign bond spreads (see, for example, Cady, 2005;Cady and Pellechio, 2006;Glennerster and Shin, 2008;Moretti, 2011;and Choi and Hashimoto, 2018;Kubota and Zeufack, 2020;Gonzalez-Garcia, 2022).…”