全球发展中心（CGD）：发现新兴市场和发展中国家面对外部冲击时宏观经济的韧性：2020-2022全球冲击带来的教训

CENTER

FOR

GLOBAL

DEVELOPMENT

IdentifyingMacroeconomicResiliencetoExternalShocksinEmergingand

DevelopingCountries

LESSONSFROMTHEGLOBALSHOCKSOF2020–2022

LilianaRojas-Suarez

Abstract

ThispaperusesastraightforwardResilienceIndicator,constructedfromasmallsetofeconomic

andinstitutionalvariables,toshowthatby2019,priortotheCOVID-19pandemicandsubsequent

KEYWORDS

Emergingmarkets,

developing

countries,financialcrisis,debt,defaults,economicresilience,externalshocks

JELCODES

E60,F32,F34,G01,G15,H60,H63

globalshocks,itwaspossibletoidentifyemergingmarketsanddevelopingcountriesthatwould

encounterseriouseconomicandfinancialproblemsifanexternalshockweretomaterialize.The

listofdevelopingcountriesidentifiedaslessresilientin2019usingthissimplemethodologyclosely

alignswiththeWorldBank’s2022compilationofcountriesindistressorathighriskofexternal

debtdistress.Furthermore,theemergingmarketeconomiesthatthisindicatoridentifiedasthe

leastresilientin2019werecountriesthathadeitherdefaultedorwereteeteringontheedgeof

defaultby2022.Identifyingcountriesthataremostvulnerabletolargeexternalshockscanassist

policymakersandtheinternationalcommunityindirectingtheireffortstowardscrisisprevention,

therebyavoidingthedetrimentalconsequencesoffinancialcrisesondevelopment.

WORKINGPAPER655•OCTOBER2023

IdentifyingMacroeconomicResiliencetoExternalShocksinEmerging

andDevelopingCountries:LessonsfromtheGlobalShocksof2020–2022

LilianaRojas-Suarez

CenterforGlobalDevelopment

IamthankfultoCharlesKennyandNancyLeefortheirthoughtfulcomments.Ialsowanttoacknowledgethe

excellentresearchassistantsupportfromNaykeMontgomeryGuzman,whotirelesslywentthroughalarge

numberofcountryreportsanddatabasesforconstructingthechartsinthispaper.

TheCenterforGlobalDevelopmentisgratefulforcontributionsfromtheBill&MelindaGatesFoundationin

supportofthiswork.

LilianaRojas-Suarez.2023.“IdentifyingMacroeconomicResiliencetoExternalShocksin

EmergingandDevelopingCountries:LessonsfromtheGlobalShocksof2020–2022.”CGDWorking

Paper655.Washington,DC:CenterforGlobalDevelopment.

/publication/

identifying-

macroeconomic-resilience-external-shocks-emerging-and-developing-countries

CENTERFORGLOBALDEVELOPMENT

TheCenterforGlobalDevelopmentworkstoreduceglobal

2055LStreet,NWFifthFloor

povertyandimprovelivesthroughinnovativeeconomic

Washington,DC20036

researchthatdrivesbetterpolicyandpracticebytheworld’stopdecisionmakers.UseanddisseminationofthisWorkingPaper

1AbbeyGardens

isencouraged;however,reproducedcopiesmaynotbeused

GreatCollegeStreet

forcommercialpurposes.Furtherusageispermittedunderthe

London

termsoftheCreativeCommonsAttribution-NonCommercial4.0

SW1P3SE

InternationalLicense.

TheviewsexpressedinCGDWorkingPapersarethoseoftheauthorsandshouldnotbeattributedtotheboardofdirectors,

CenterforGlobalDevelopment.2023.

fundersoftheCenterforGlobalDevelopment,ortheauthors’respectiveorganizations.

Contents

I.Introduction 1

II.Asimpleframeworkforidentifyingresilience 3

Countriesinthesample 4

III.ThefirstdimensionofresilienceinEMDEs:Capacitytowithstand

theimpactofanadverseshock 5

1.Externalfinancingneeds 5

2.Externalsolvency 8

IV.TheseconddimensionofresilienceinEMDEs:Capacitytopromptly

respondtotheeffectsofashock 12

1.FiscalbalanceasaratioofGDP 12

2.Governmentindebtedness 15

3.Deviationofinflationfromtarget 18

4.Institutionalquality 21

V.Theresilienceindicator:Howresilientwerecountriesbefore

themultipleshocksoftheearly2020s? 23

1.Developingcountriesresilience 25

2.Emergingmarketsresilience 28

VI.Concludingremarks 30

References 32

Annex:Developingcountries’inflationtargets/objectivesin2019 34

ListofFigures

1.Thetwodimensionsofeconomicresilience 4

2.Externalfinancingneedsindevelopingcountriesandemergingmarkets

(currentaccountdeficit+short-termdebtaspercentageofinternational

reserves),2019 7

3.CorrelationbetweenexternaldebtandPVofexternaldebt(aspercentage

ofGDP)in2019 9

4.Externaldebtindevelopingcountriesandemergingmarkets(aspercentage

ofGDP)in2019 11

5.Overallbalanceofthegeneralgovernmentindevelopingcountriesand

emergingmarkets(asapercentageofGDP)in2019 13

6.FiscalbalancesinBurundi,Ghana,KenyaandZambia(aspercentage

ofGDP),2015–2019 14

7.FiscalbalancesinAlgeria,Egypt,PakistanandSriLanka(aspercentage

ofGDP),2015–2019 14

8.Fiscalbalanceswithandwithoutgrantsindevelopingcountries

(aspercentageGDP)in2019 15

9.CorrelationbetweengovernmentdebtandPVofgovernmentdebt

(aspercentageofGDP)2019 16

10.Generalgovernmenttotaldebtindevelopingcountriesandemerging

markets(aspercentageofGDP),2019 17

11.Deviationofinflationfromtarget(percentagepoints)in2019 20

12.Institutionalqualityindevelopingandemergingmarketeconomiesin2019 22

13.Sovereignbondyieldsbeforeandaftertheshocksoftheearly2020s

(developingcountries) 26

14.Sovereignbondyieldsbeforeandaftertheshocksoftheearly2020s

(emergingmarketeconomies) 29

ListofTables

1.Resilienceindicator,201924

I.Introduction

Ithaslongbeenestablishedthatdebtandotherfinancialcrisesposeathreattodevelopment.

Numerousexamplesdemonstratehowbalanceofpaymentscrises,debtcrisesandbankingcriseshavereversedsocialprogressindicatorssuchaspovertyratios,accesstopublicserviceslikehealthandeducation,andinequalityinmanyemergingmarketsanddevelopingeconomies(EMDEs).1

Therefore,itwasdeeplyconcerningwhentheManagingDirectoroftheInternationalMonetary

Fund(IMF)announcedinSeptember2022thatsixtypercentofdevelopingcountriesandtwenty-fivepercentofemergingmarketeconomieswereeitherindebtdistressoratsevereriskofdefault.2Toanimportantextent,thisoutcomewasattributedtothesignificantindebtednessincurredby

governmentsandfirmsduringtheCOVID-19pandemictonavigatethroughthecrisisandtotheeconomiceffectsofRussia’sinvasionofUkraine.

Whiletheidentificationofcountriesundersevereeconomicstresscertainlyplaysacrucialrolein

resolvingcrises,particularlyinmobilizingnecessaryresourcesfromtheinternationalcommunity,animportantquestionarises:Couldfragilecountrieshavebeenidentifiedpriortotheeruptionof

Covid-19andthesubsequentmultipleshocks,suchasRussia’sinvasionofUkraineandthetighteningofinternationalfinancialconditionsresultingfromrisinginterestratesinmajoradvanced

economies.3Addressingthisquestionisofutmostimportancesinceitfocusesonpreventingcrises;afterall,avoidingfallingintosevereeconomicandfinancialdownturnsisessentialforsustainabledevelopment.

Thispaperfocusesonpreciselythisissue.Drawingfromprevioussystemiccrisisepisodes,itis

evidentthatnotallcountriesexperiencethesameconsequencesdespitebeingexposedtocommonshocks.Economicandfinancialcrisesdonotfollowinallcountriesimpactedbyaseverecommon

shock.Inessence,somecountriesexhibitgreaterresiliencethanothers.Therefore,thekeyquestions

tobeaddressedare:(a)Howcanweidentify,atagivenpointintime,thosecountriesthatarerelatively

lessresilienttoexternalshocks?And(b)Isitpossibletoidentifythesecountriesbeforeashock

occurs,allowingappropriatecorrectionmeasurestobeputinplacetopreventtheeruptionofcrises?

Theshortanswertobothquestionsisaffirmative.Infact,thecentralfindingofthispaper’sanalysisisthatasof2019,theyearpriortotheCovid-19outbreak,itwaspossibletoidentifywhichcountrieswouldencounterseriouseconomicandfinancialproblemsifanexternalshockweretomaterialize.Inotherwords,publisheddatafor2019clearlyindicatedthatasignificantnumberofcountrieswerealreadygrapplingwithdeepvulnerabilitiespriortothemultipleshocksthathaveaffectedtheglobaleconomysince2020.Whilenotflawless,thelistofcountriesidentifiedaslessresilientin2019using

1InLatinAmerica,forexample,thedeepfinancialcrisesofthe1980sresultedinwhatisknownasthelostdecade,aperiodofeconomicstagnationandincreaseinpovertyandinequality.

2See:

/en/News/Articles/2022/09/14/tr091322-cgd-transcript

.

3Theliteratureshowsthat,becauseoftheirparticularcharacteristics,EMDEs’vulnerabilitytoexternalshocksislargerthanthoseinadvancedeconomies.Specifically,adverseexternalshocksleadtosharpreversalsintheinflowsof

capitaltoEMDEs.Thisseverelyaffectstheavailabilityofsourcesneededtofinancetheirdevelopmentprojects.

IDENTIFYINGMACROECONOMICRESILIENCETOEXTERNALSHOCKSINEMERGING1

ANDDEVELOPINGCOUNTRIES

thesimplemethodologyoutlinedinthispapercloselyalignswiththelistofcountriesidentifiedby

theWorldBankin2022asbeingindistressorathighriskofexternaldebtdistress.

Themethodologyemployedinthispaperbuildsuponmypreviousworkonthesubject(Rojas-Suarez(2015).Similartothatstudy,resilienceisbroadlydefinedhere.Acountryisconsideredhighly

resilienttoanexternalshockifmajordisruptionstoitseconomicandfinancialsystemsdonotoccuraftertheshock;thatis,economicand/orfinancialcrisesdonotfollow.Acentralpremiseofthepaperisthatcountries’initialeconomicandinstitutionalconditionsbeforetheoccurrenceofanexternalshocksignificantlyinfluenceitsresilience.Thisperspectiveisalsosupportedbyanalystswhohave

studiedtheeffectsoftheglobalfinancialcrisisonemergingmarkets,astheyfoundthatpolicy

decisionsmadepriortothecrisisplayedasubstantialroleinshapingtheimpactonlocaleconomicandfinancialsystems.4

FollowingtheapproachinMontoroandRojas-Suarez(2012),thispapercharacterizesresilienceas

havingtwodimensionsinordertoidentifyvariablesthatindicateacountry’seconomicstrength.Thefirstdimensionpertainstoacountry’scapacitytowithstandtheimpactofexternalshockswhiletheseconddimensionrelatestothecountry’sabilitytopromptlyrespondtotheeffectsoftheseshocks.

Variablesthatdefinethesetwodimensionsencompassmacroeconomicfactors(suchasexternal

debtpositions)andinstitutionalvariables(suchasthegovernment’seffectivenessinimplementingcrediblepolicies).ThesevariablesarecombinedtocreateanoverallResilienceIndicatorthatcan

beusedtomakecross-countrycomparisons.Additionally,thepaperexaminesthebehaviorof

individualcomponentsoftheindexacrosscountries,enablingtheidentificationofcountry-specificweaknessesandstrengths.

ThedatausedtoconstructtheResilienceIndicatorareprimarilysourcedfrompublishedmaterial.Whilesomedatacanbeobtainedfromworldwidedatabases,othersarederivedfromnational

sourcesorcountry-specificdocumentspublishedbymultilateralorganizations.Thepaperprovides

detailsonthesourcesofinformationused.

Thesubsequentsectionsofthepaperareorganizedasfollows:SectionIIpresentstheframework

utilizedinthestudy,characterizesthetwodimensionsofresilience,andidentifiesthevariables

incorporatedinconstructingtheResilienceIndicator.SectionIIIdiscussesthebehaviorofthe

variablesrelatedtothefirstdimensionofResiliencein2019(thepre-COVIDyear)forasetofEMDEs.SectionIVfollowsasimilarapproachforvariablesintheseconddimension.Countriesaredivided

intotwogroupsbasedontheirdegreeofdevelopment:emergingmarketeconomiesanddevelopingcountries.SectionVcombinestheanalyzedvariablestoconstructtheResilienceIndicator.Despiteitslimitations,theindicatorconveysaclearmessage:asof2019,thewritingwasonthewallregardingtheidentificationofcountrieswithrelativelylimitedabilitytowithstandthemultitudeofexternalshocksthatstartedin2020withtheCovid-19pandemic.Finally,SectionVIconcludesthepaper.

4See,forexample

Cecchetti

etal.(2011)and

MontoroandRojas-Suarez

(2012).

IDENTIFYINGMACROECONOMICRESILIENCETOEXTERNALSHOCKSINEMERGING2

ANDDEVELOPINGCOUNTRIES

II.Asimpleframeworkforidentifyingresilience

AsinRojas-Suarez(2015),economicresilienceisdefinedhereinbroadterms.Acountryis

consideredhighlyresilientifitcanavoideconomicorfinancialcrisis(likeadebtcrisisorabankingsystemcrisis)followingalargeexternalshock.Thispaperarguesthatthelevelofacountry’s

economicresilienceinthefaceofanadverseexternalshocklargelyhingesonitseconomicandfinancialstrengthbeforetheshock;thatis,initialconditionsareextremelyimportant.

DrawingfromMontoroandRojas-Suarez(2012)andRojas-Suarez(2015),economicresilienceis

characterizedashavingtwodimensions:acountry’scapacitytowithstandtheimpactofanegativeshockanditsabilitytoswiftlyimplementpoliciestomitigatetheeffectsoftheshockoneconomicandfinancialstability.Thissectionproposesasetofindicatorstomeasurethesetwodimensions.

Indeterminingindicatorsforthefirstdimension,itiscrucialtorecognizethattheprimarynegativeeffectofexternalshocksisadecreaseinexternalsourcesoffinancecoupledwithasurgein

theircost.Theseshockscanundermineexpectationsonacountry’seconomicperformanceand

financialstability,discouragingbothinternationalanddomesticinvestorsfromfinancingprojectsorinvesting.Thiseffectcouldariseviathecommercialchannel(forinstance,duetoadrasticdropindemandforacountry’sexports)orthefinancialchannel(forinstance,duetoasharpriseinU.S.interestrates).Whilefinancialshocksdirectlyinstigateincreasesinthecostofexternalfinancing,atradeshockindirectlybringsaboutsimilarpressuresasfundingcostsareswayedbyinvestors’

perceptionofincreasedrisk.

Suchdynamicsimplythatthestrongeracountry’sexternalposition,themoreequippeditistoresist

theimpactofanexternalshock.Thiscanbeevaluatedby(a)itsexternalfinancingneeds(aliquidity

indicatorthatcanbemeasuredbythecurrentaccountpluspaymentsonshort-termdebtrelativetothestockofinternationalreserves),and(b)theoutstandingstockofitsexternaldebt(asolvencyindicator).

Theseconddimensionofresilience—theabilityoftheauthoritiestopromptlyrespondtoanadverse

shock’seffect—largelydependsonthefiscalandmonetarypositionsatthetimeoftheshock.In

otherwords,theavailablefiscalandmonetaryspacetoimplementadequatepolicies,oftencounter-cyclicalones.

Thefiscalpositionisdefinedbythegovernment’sfinancingneeds(thefiscalbalance)andits

overallindebtedness(domesticandexternal).Concurrently,thescopeforcountercyclicalmonetarypolicyisdeterminedbytheabsenceofconstraintstotheusageoftheCentralBank’spolicytools

(suchaschangesinthepolicyinterestrateorinterventionsinforeignexchangemarkets).Inthisregard,significantdeviationsfromannouncedinflationtargetsareidentifiedashindrancestotheimplementationofeffectivecountercyclicalmonetarypolicy.5

5Financialinstabilitiesorthelackofcentralbankindependenceareotherfactorsthatcanconstrainthe

implementationofeffectivecountercyclicalmonetarypolicy.Foranindicatorthatincludestheformer,

seeRojas-Suarez(2015).

IDENTIFYINGMACROECONOMICRESILIENCETOEXTERNALSHOCKSINEMERGING3

ANDDEVELOPINGCOUNTRIES

External

financingneeds

Thefiscalposition

Institutionalquality

Fiscalbalance

Governmentindebtednes

Governmentefectivenes

Controlofcorruption

Regulatoryquality

Additionally,authoritieswouldbeabletoswiftlyimplementadequateactions,iftheyremain

unaffectedbypoliticalpressuresandoperateinasystemwherecorruptioniseffectivelycontrolled.Inotherwords,institutionalqualityplaysacriticalroleindeterminingtheseconddimensionof

resilience,warrantingtheinclusionofvariablesmeasuringitsstrength.

Figure1summarizesthetwodimensionsofresilience.

FIGURE1.Thetwodimensionsofeconomicresilience

Firstdimension:capacitytowithstandtheimpactofexternalshocks

Theexternalposition

Externalsolvency

Seconddimension:theauthoritiesabilitytoswiftlyrespondtotheeectsofashock

Themonetaryposition

Inflationdeviationfromtarget

Theupcomingtwosectionswilldelvedeeperintothesetofvariablesmeasuringthesetwo

dimensions.Eachvariablewillbeexaminedforagroupofdevelopingcountriesandagroupof

emergingmarketsin2019,theyearprecedingthemultipleshocksthatdisruptedtheglobaleconomystartingin2020:theCovidshock,Russia’sinvasionofUkraineandtheUSFederalReserve’sinterestratehike.Thisexercisefacilitatesthecomparisonofeachcountry’seconomicandfinancialstrengthrelativetoitspeers.

Countriesinthesample

Weevaluateresiliencetoexternalshocksfortwogroupsofcountries:emergingmarketsand

developingeconomies.ThecountriesclassificationfollowsthatoftheInternationalMonetaryFund.Weexcludedcountriesbasedonthefollowingcriteria:

.Insufficientdatatoconstructtheresilienceindicator.

.Smallislandspronetonaturaldisasterssincethesecountriesalsofaceshocksthatdifferfromthefinancialandmacroeconomicshocksthatarethecenterofanalysisinthispaper.

.Countriesembroiledinhigh-intensityconflicts.

Withthesecriteria,oursamplecomprises71countries:37emergingmarketsand34developingcountries.

IDENTIFYINGMACROECONOMICRESILIENCETOEXTERNALSHOCKSINEMERGING4

ANDDEVELOPINGCOUNTRIES

III.ThefirstdimensionofresilienceinEMDEs:

Capacitytowithstandtheimpactofanadverseshock

EMDEs’localcapitalmarketsaregenerallyunderdevelopedandhighlyconcentrated,providinglimitedsourcesoffundingforinvestmentprojects.Consequently,EMDEsareheavilydependentonexternal

sourcesoffunding.Therefore,ashockthatincreasescostsandreducestheavailabilityofexternal

financecanbedetrimentaltoEMDEs.Iftheshockislargeandabrupt—asuddenstop—countriesmaystrugglewithrollingoverexistingmaturitiesandmakinggoodontheiroutstandingobligations.

Historically,suchsituationshaveoftenledtodebtcrisesandevenbankingcrisesinmanyEMDEs.6

Amongothers,twoindicatorscanofferareliableassessmentonEMDEsexternalfinancial

vulnerabilities:thecountry’sexternalfinancingneedsanditsexternaldebttoGDPratio.Theremainderofthissectionwillexplaintherelevanceofthesevariablesandanalyzetheirbehavior.Toevaluatethecountries’capacitytowithstandtheimpactofthemultitudeofshocksthathittheglobein2020and

beyond,weassesstheexternalpositionsofallcountriesin2019,theyearbeforetheCovidpandemic.

1.Externalfinancingneeds

Asimplemeasureofacountry’sexternalfinancingneedscanbeconstructedbyaggregatingthe

currentaccountdeficit(orsurplus,addinganegativesign)ofthebalanceofpaymentsandthestockofshort-termdebt.Thisaggregaterepresentsthefinancialresourcesthatcountriesrequireinagiven

yeartofulfilltheirpaymentobligations.Toassessvulnerabilitytoanexternalshock,thisvalueneedstobecomparedwiththeavailabilityofexternalliquidity,whichcanbeapproximatedbythestockof

internationalreserves.7Thus,theformulaforcalculatingexternalfinancingneedsisasfollows:

Externalfinancingneeds=Currentaccountdeficit+Short-termdebt

InternationalReserves

Whenfacinganadverseexternalshock,countriesmustdemonstrateimmediateaccesstoresourcestofulfilltheirpaymentsdueduringtheperiodfollowingtheshock.Theneedtohaveproofof

liquidityisparticularlycrucialforEMDEssincetheylacktheabilitytoissuehardcurrencies;thatis,currenciesthatareinternationallytradedinliquidmarkets.Thus,largeaccumulationofforeign

exchangereserves,limitedamountsofshort-termexternaldebtandsmallcurrentaccountdeficitssignificantlycontributetotheinternationalcreditworthinessofEMDEs,helpingthemwithstand

theimpactofshocks.Asaruleofthumb,valuesoftheexternalfinancingneedsindicatorabove

100percentsignalsignificantvulnerabilitiesindealingwithexternalshocks.Insuchcases,the

shockmayimpedetheroll-overofexternalobligations,andtheexistingstockofreservesmayproveinsufficienttocoverimmediatepaymentrequirements.

6See:Calvoetal.(2004).

7Analternativemeasureistheratioofexternaldebtservicetoexports(ortointernationalreserves).Dataondebtservice,however,ishardtofindonaconsistentbasisforallcountries.

IDENTIFYINGMACROECONOMICRESILIENCETOEXTERNALSHOCKSINEMERGING5

ANDDEVELOPINGCOUNTRIES

ItisimportanttoemphasizethattheliquidityconstraintfacedbyEMDEs(andnotbyadvanced

economieswhichcanissuehardcurrencies),cannotberesolvedbyfullexchangerateflexibility.

Evenwithasharpdepreciationofthelocalcurrencyinresponsetoanadverseexternalshock,

EMDEscannotgeneratesufficientresources(viaexportrevenues)quicklyenoughtomeetexternalamortizationsandinterestpayments.Thisexplains:(a)thehugeaccumulationofinternational

reservesbymanyEMDEsand(b)theirchoiceofincreased,yetnotfullyflexible,exchangerateregimes.8

Analyzingtheexternalfinancingneedsvariable(aflowvariable)inconjunctionwiththeratioof

externalindebtedness(astockvariable)iscrucial.Forcountrieswithlimitedaccesstointernational

capitalmarkets,evenrelativelysmallratiosofexternaldebtmayleadtodebtsustainability

concernsifthecountriesfacelargeexternalfinancingneeds.Toillustrate,considerthecaseof

Burundi:AlthoughitsexternaldebttoGDPratio(tobediscussedbelow)in2019wasrelativelylowbyinternationalstandards(18percent),thecountryfacedsubstantialfinancingneeds(thevalue

ofthecurrentaccountbalanceplusshort-termdebtasaratioofinternationalreservedexceeded

over300percent).Withminimalaccesstoprivateexternalfunding,thecountryheavilyreliesondonors’grantsanditsownaccumulationofinternationalreservestodemonstratetheavailabilityofnecessaryresourcesformeetingpaymentsdue,primarilyforimports(netofexports)and

interestpaymentsonoutstandingdebt.Thus,formanydevelopingcountries,particularlyinAfrica,

exhibitingsimilarcharacteristicstoBurundi,largeexternalfinancingneedsserveasanindicatorofvulnerabilitythatgreatlycompromisestheirresiliencetoexternalshocks.9

Forcountrieswithaccesstotheprivateinternationalcapitalmarkets,suchasthoseclassifiedas

emergingmarkets,theexternalfinancingneedsvariableindicatesacountry’scapacitytomaintainlowcostsandcontinuousaccesstoexternalfinance.Policymakersarehighlyconcernedaboutthe

possibilityofasuddenstopofcapitalinflowsduetomajordisturbancesintheinternationalcapital

marketsoridiosyncraticdevelopmentsinspecificcountries(suchasescalatedsocialunrest)rank

highamongpolicymakers’anxieties.Theconcernisthattheseeventswouldincreaseinvestors’

riskaversionandreduceappetitefordebtinstrumentsissuedbyemergingmarkets.Toaddress

theseconcerns,policymakersinmanyofthesecountrieshaveaccumulatedsubstantialamountsofinternationalreserves.Forexample,despiteofrunningasignificantcurrentaccountdeficitin2019(closeto5percentofGDP),Colombiamanagedtorankinthemid-rangeamongemergingmarkets

economiesintermsoftheexternalfinancingneedsvariable(seegraphbelow).Thisfavorablepositionwasattributabletothecountry’slargeholdingsofinternationalreserves.

8See:Rojas-Suarez(2013).

9Thereisalsotheissueofhowtotreatdonors’grants.InseveralAfricancountries,currentaccountdeficitswouldbe

muchlargerwithoutgrants,which,althoughamorestablesourceoffundsthanfundingfromtheinternationalcapitalmarkets,cannotbetakenaspermanent.Forexample,inCentralAfricanRepublic,thecurrentaccountdeficitreachedUS$113million(or32percentofinternationalreserves)in2019.Withoutgrants,however,thedeficitwouldamount

toUS$273million(or78percentofinternationalreserves)andthevariableexternalfinancingneedswouldreacha115percent.Intheanalysisofthisvariable,weincludegrantsinthecalculationofthecurrentaccounttofacilitatecomparisonbetweencountries.Weacknowledge,however,thatthereisvalueinassessingacountry’sresiliencetoexternalshocksbyexcludinggrantsfromtheestimates.

IDENTIFYINGMACROECONOMICRESILIENCETOEXTERNALSHOCKSINEMERGING6

ANDDEVELOPINGCOUNTRIES

BurundiSierraLeone Ethiopia LaoP.D.R. Malawi Chad Guinea SenegalMozambique Uganda Rwanda Niger MoldovaBenin

Mali Kenya GhanaCameroon

CentralAfricanRepublicKyrgyzRepublic

TheGambiaGuinea-Bissau BurkinaFaso Bangladesh Cambodia Nigeria ZambiaMadagascarNepal

Côted’IvoireHondurasNicaragua VietnamUzbekistan

Figures2aandbshowthevaluesoftheexternalfinancingneedsvariableforthesampleofdevelopingcountriesandemergingmarketsinouranalysis.Dataforcurrentaccountdeficits/balancesand

internationalreservesareobtainedfromtheIMF’sWorldEconomicOutlook.Informationonshort-termdebtissourcedfromtheAssessingReserveAdequacy(ARA)databaseoftheIMFandIMFStaffReportsforemergingmarketeconomiesandfromtheWorldBank’sExternalDebtStatisticsfor

developingcountries.10

FIGURE2.Externalfinancingneedsindevelopingcountries

andemergingmarkets(currentaccountdeficit+short-termdebt

aspercenta