Suchergebnisse

Cover -- CONTENTS -- BACKGROUND -- RECENT DEVELOPMENTS AND GROWTH PROSPECTS -- CAPACITY TO REPAY -- A. Repayment Capacity Under the Baseline Scenario -- B. Risks to Repayment Capacity -- POLICIES TO REDUCE REPAYMENT RISKS -- A. Financial Sector Policy -- B. Fiscal Policy -- C. Structural Reforms -- STAFF APPRAISAL -- BOXES -- 1. Strategy for the CCB -- 2. Bank Interventions and Sovereign Bond Spreads -- 3. Challenges in Setting Up a Centralized Asset Management Company (AMC) -- FIGURES -- 1. Macroeconomic Performance -- 2. Inflation and Labor Market -- 3. External Indicators -- 4. Credit and Balance Sheets -- 5. Banking Sector -- 6. Housing Market -- 7. Fiscal Developments -- TABLES -- 1. Selected Economic Indicators, 2015-23 -- 2. Fiscal Developments and Projections, 2015-23 -- 3. General Government Gross Financing Requirements and Sources of Financing, 2018-23 -- 4. Balance of Payments, 2013-23 -- 5. External Financing Requirements and Sources, 2013-23 -- 6. Monetary Indicators, 2010-17 -- 7. Financial Soundness Indicators, 2010-17 -- 8. Indicators of Fund Credit, 2013-26 -- ANNEXES -- I. Public Sector Debt Sustainability Analysis -- II. Risk Assessment Matrix -- III. Financial Position in the Fund.

We develop a macroeconomic model in which the government does not guarantee to repay debt. We ask whether movements in the price of government bonds can be rationalized by lenders' unwillingness to fully roll over debt when the outstanding level of debt exceeds the government's repayment capacity. Investors do not support a Ponzi game in this case, but ration credit supply, thus forcing default at an endogenously determined fractional repayment rate. Interest rates on government bonds reflect expectations of this event. Numerical results show that default premia can emerge at moderately high debt-to-GDP ratios where even small changes in fundamentals lead to steeply rising interest rates. The behavior of risk premia broadly accords with recent observations for several European countries that experienced a worsening of fundamental fiscal conditions.