Statistical Terms Glossary

A heavily indebted country. This classification is used primarily by the OECD.

Conversion of non-resident foreign currency debt into resident local currency debt. Has been used by Chile.

It occurs when a firm raises money for working capital or capital expenditures by selling bonds, bills or notes to individuals and/or institutional investors.

Exchange of debts for cash. This is done through the secondary market of bank claims where a country's debt can be sold for cash at a discount. Mainly used so far in Chile. Note that the actual Chilean process is called adquisicid6n de titulos de la deuda extema.

Swap whereby a debtor country repays its debts in local currency to a development agency which then uses this money to finance a development project in the country concerned.

A method of converting developing country foreign currency debt into local currency equity in a domestic firm. The investor may be the bank holding the loan or a company which buys the loan from a bank at a discount. The loan is then typically sold at near face value to the central bank of the host country for local currency instruments, which in turn are used to make the equity investment.

Swap whereby a bank arranges to export a variety of domestic products and commodities to offset part of its outstanding claims in the country.

Issue by the central bank of a local currency debt obligation in exchange for a foreign debt claim. Domestic residents can thus buy their own country's debt in the secondary market, using expatriated capital or foreign currency acquired in the parallel market.

Swap arranged by private conservation group to use the proceeds of debt conversions to finance conservation projects relating to valuable park land or tropical forests.

Debt forgiveness occurs when a government creditor entity in one economy formally agrees - via a contractual arrangement - with a debtor entity in another to forgive (extinguish) all, or part, of the obligation of the debtor entity to the creditor, the amount forgiven is treated as a capital transfer from the creditor to the debtor. That is, the balance of payments reflects a reduction of the liability offset by the transfer. Similar treatment is applicable when a government entity’s debt is forgiven by agreement with a creditor entity in another economy

Debt forgiveness occurs when a debtor and creditor become parties to a bilateral agreement that a financial claim no longer exists

Existing debt instruments typically arise out of contractual relationships under which an institutional unit (the debtor) has an unconditional liability to another institutional unit (the creditor) to repay principal with or without interest, or to pay interest without principal. These instruments include debt securities, loans, trade credit, and currency and deposits. Debt instruments may also be created by the force of law—in particular, obligations to pay taxes or to make other compulsory payments—or through rights and obligations that results in a debtor accepting an obligation to make future payment(s) to a creditor.

1. The total outstanding debt.
2. The total debt that cannot be readily covered by expected growth.

Ratio of total liabilities to total assets.

Debt refinancing refers to the conversion of the original debt including arrears, into a new debt instrument. In other words, overdue payments or future debt-service obligations are “paid off” using a new debt obligation. In the Guide, as in BPM5, a change in the terms of a debt instrument is to be reported as the creation of a new debt instrument, with the original debt extinguished.

Debt relief is any form of debt reorganisation which relieves the overall burden of debt

Any action officially agreed between creditor and debtor that alters the terms previously established for repayment. This may include forgiveness (extinction of the loan), or rescheduling which can be implemented either by revising the repayment schedule or extending a new refinancing loan.

Debt rescheduling refers to the formal deferment of debt-service payments and the application of new and extended maturities to the deferred amount. Rescheduling debt is one means of providing a debtor with debt relief through a delay and, in the case of concessional rescheduling, a reduction in debt-service obligations.

Changing the maturity and/or terms of a loan.

Paying off a debt.

Debt securities cover all tradable securities, except those classified as equity securities. Debt securities include bonds, debentures, notes, etc., money market or negotiable debt instruments

A promise on the part of the issuer (i.e. the borrower) to make one or more payment(s) to the holder (the lender) at a specified future date or dates. Such securities usually carry a specific rate of interest (the coupon) and/or are sold at a discount to the amount that will be repaid at maturity.

Refers to payments in respect of both principal and interest. Actual debt service is the set of payments actually made to satisfy a debt obligation, including principal, interest, and any late payment fees. Scheduled debt service is the set of payments, including principal and interest, that is required to be made through the life of the debt.

The debt service ratio is the ratio of debt service payments made by or due from a country to that country’s export earnings.

Option under concessional Paris Club debt reschedulings where creditors effect the required debt reduction in present value terms through a reduction in the applicable interest rate.

The ratio of debt payment for five and ten years to the debt outstanding at the end of a given year.

A study of a country’s medium- to long-term debt situation. A country’s eligibility for support under the HIPC Initiative is determined on the basis of such an analysis, jointly undertaken by the staffs of the IMF, the World Bank, and the country concerned.