By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-The World Bank Friday said the combined stock of developing countries’ External Debt increased by $464 billion to $4.9 trillion at end 2011.

This is contained in a Press Release by the Bank and obtained by InvestAdvocate.

The World Bank said Net External Debt Inflows and Aggregate Net Capital Inflows (debt and equity) to developing countries fell in 2011, driven by a sharp contraction in Net Inflows from official Creditors and a collapse of Portfolio Equity Flows.  “The downturn was partially offset by Inflows from Commercial Banks, sustained access to International Bond Markets and a rise in Foreign Direct Investment (FDI)” the International Debts Statistics 2013 Reported .

Ibrahim Levent, Senior Information Officer in the Bank’s Data Group and part of the team that produced the report said these international debt statistics are a vital input for experts working to improve the management of Capital Flows around the world and having the data open to all is a welcome development.

The Report of the International debt statistics 2013, said the External Debt increased by $464 billion to $4.9 trillion at year 2011 end; but at an average of 22 percent (22%) which remained moderate in relation to Gross National Income (GNI), and to exports (an average of 69%).

The World Bank said Short-term debt constituted 26% of Debt Stock, but risks were mitigated by International Reserves, equivalent to 121% of External Debt Stock at the end of year 2011.

According to the World Bank, other key trends and developments is that Net External Debt Inflows to developing countries fell 9% in 2011 to $465 billion due to the sharp contraction in Inflows from Official Creditors, which fell to $30 billion (from $73 billion in 2010). 

“By contrast at $434 billion, Net Inflows from Private Creditors were almost identical to their 2010 level, but with an important shift in composition: Net Short-Term Debt Inflows contracted by 27%, while Medium- and Long–Term Financing from Commercial Banks tripled to $110 billion” the Report said.

Apart from these, the World Bank affirmed that Aggregate Net Capital Inflows (Debt and Equity) also fell 9% in 2011 to $1,107 billion (4.9% of GNI), compared with $1,211 billion in 2010 (6.2% of GNI), but stayed close to their pre-crisis peak of $1,180 billion in 2007.

The downturn according to the Report was due to the collapse in Portfolio Equity Flows, which fell to $2 billion, (compared to an inflow of $120 billion in 2010).  “Meanwhile, Foreign Direct Investment continued on an upward trajectory, rising by 11% in 2011 to a record high of $644 billion” the World Bank International Debt statistics 2013 reported.

The Bank further affirmed in its Report that China received 27% of Net Debt and 35% of Net Equity Flows to all developing countries in 2011. “When China is excluded, Net External Debt Inflows and Aggregate Net Capital Inflows to developing countries fall 13% and 3% respectively in 2011, compared with 2010” the World Bank said.

Also, Countries reporting to the Quarterly External Debt Statistics and the Public Sector Database confirmed that high income countries have, on average, a much higher level of External Debt: 126% of GDP for G7 countries in 2011 compared to 19% for the top ten developing countries.

“General Government Debt (External and Domestic) is also much higher, with an average of 76% in Euro-zone (17) countries in 2011, more than twice the comparable ratio for the largest borrowers among developing countries” the Report said.