mango may, 2007 may 2007 specific issues related to sovereign ratings paris club meeting with...
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![Page 1: MANGO May, 2007 May 2007 Specific Issues Related to Sovereign Ratings Paris Club Meeting with Private Sector Paris, May 2007 Khalid Sheikh](https://reader036.vdocuments.us/reader036/viewer/2022082817/56649dc65503460f94ab9ce9/html5/thumbnails/1.jpg)
MANGO May, 2007
May 2007
Specific Issues Related to Sovereign Ratings
Paris Club Meeting with Private Sector
Paris, May 2007
Khalid Sheikh
![Page 2: MANGO May, 2007 May 2007 Specific Issues Related to Sovereign Ratings Paris Club Meeting with Private Sector Paris, May 2007 Khalid Sheikh](https://reader036.vdocuments.us/reader036/viewer/2022082817/56649dc65503460f94ab9ce9/html5/thumbnails/2.jpg)
2MANGO May, 2007
What is Sovereign rating about?
• Internal system
• Benchmarked against external ratings
• Based on quantitative data and qualitative assessments
• Pillars: Structural setting, government balance and government debt, private sector soundness, monetary stability, foreign debt, current account, international liquidity and political stability
• Foreign and local currency rating (Fcy and Lcy)
• Outlooks
• Flags - short term risk signals
![Page 3: MANGO May, 2007 May 2007 Specific Issues Related to Sovereign Ratings Paris Club Meeting with Private Sector Paris, May 2007 Khalid Sheikh](https://reader036.vdocuments.us/reader036/viewer/2022082817/56649dc65503460f94ab9ce9/html5/thumbnails/3.jpg)
3MANGO May, 2007
Sovereign rating
• Ranking is primarily forward looking (three years horizon) and not mechanical. Anticipatory scores and qualitative assessments are allocated a weighting of around 65%
• Short term developments play an important role as well: short term debt, reserves and the assessment of the liquidity situation count for around 20%. (reflected in flags, event risk analysis)
• Rating agencies are used as reference
• Focal points liquidity and solvability of a sovereign in relation to its willingness and ability to fulfil its payments obligations
![Page 4: MANGO May, 2007 May 2007 Specific Issues Related to Sovereign Ratings Paris Club Meeting with Private Sector Paris, May 2007 Khalid Sheikh](https://reader036.vdocuments.us/reader036/viewer/2022082817/56649dc65503460f94ab9ce9/html5/thumbnails/4.jpg)
4MANGO May, 2007
Basics of Sovereign Rating System
• Pillars
• Data + scales = (sub)scores
• Assessments
• Weights
• Final scores
![Page 5: MANGO May, 2007 May 2007 Specific Issues Related to Sovereign Ratings Paris Club Meeting with Private Sector Paris, May 2007 Khalid Sheikh](https://reader036.vdocuments.us/reader036/viewer/2022082817/56649dc65503460f94ab9ce9/html5/thumbnails/5.jpg)
5MANGO May, 2007
Snapshot overview Bangladesh
Economic performance vis-à-vis other Emerging Markets.
Emerging Markets average is equal to 0
Graph shows deviation from average in number of standard deviations.
-3-2
-1
0
1
23
Income
GDP Growth
Investment
Inflation
Exports/GDP
Current account
Net foreign investments
REER
Ext. debt/GDP
Ext. debt/exports
Debt service/GDP
Short/Long debt
Domestic credit growth
Reserves
Fiscal deficit
Public debt
2003 2005 2007
Outward movements indicate risk deterioration
![Page 6: MANGO May, 2007 May 2007 Specific Issues Related to Sovereign Ratings Paris Club Meeting with Private Sector Paris, May 2007 Khalid Sheikh](https://reader036.vdocuments.us/reader036/viewer/2022082817/56649dc65503460f94ab9ce9/html5/thumbnails/6.jpg)
6MANGO May, 2007
Bangladesh pillar scores
Bangladesh Jamaica
3.3
4.1
2.1
2.2
6.6
7.5
5.5
5.5
3.0
0 2 4 6 8 10
Structural setting
Private sector soundness
Government debt
Government balance
Monetary stability
Current account
I nternational liquidity
Foreign debt
Political situation
min max
Pillar scores4.4
4.7
3.6
5.0
5.6
2.1
5.0
6.5
4.0
0 2 4 6 8 10
Structural setting
Private sector soundness
Government debt
Government balance
Monetary stability
Current account
I nternational liquidity
Foreign debt
Political situation
min max
Pillar scores
![Page 7: MANGO May, 2007 May 2007 Specific Issues Related to Sovereign Ratings Paris Club Meeting with Private Sector Paris, May 2007 Khalid Sheikh](https://reader036.vdocuments.us/reader036/viewer/2022082817/56649dc65503460f94ab9ce9/html5/thumbnails/7.jpg)
7MANGO May, 2007
Snapshot overview Ghana
Economic performance vis-à-vis other Emerging Markets.
Emerging Markets average is equal to 0
Graph shows deviation from average in number of standard deviations.
-3-2
-1
0
1
23
Income
GDP Growth
Investment
Inflation
Exports/GDP
Current account
Net foreign investments
REER
Ext. debt/GDP
Ext. debt/exports
Debt service/GDP
Short/Long debt
Domestic credit growth
Reserves
Fiscal deficit
Public debt
2003 2005 2007
Outward movements indicate risk deterioration
![Page 8: MANGO May, 2007 May 2007 Specific Issues Related to Sovereign Ratings Paris Club Meeting with Private Sector Paris, May 2007 Khalid Sheikh](https://reader036.vdocuments.us/reader036/viewer/2022082817/56649dc65503460f94ab9ce9/html5/thumbnails/8.jpg)
8MANGO May, 2007
Ghana pillar scores
Ghana Philippines
3.8
5.4
5.3
3.2
5.6
5.4
5.0
6.5
4.0
0 2 4 6 8 10
Structural setting
Private sector soundness
Government debt
Government balance
Monetary stability
Current account
I nternational liquidity
Foreign debt
Political situation
min max
Pillar scores
4.4
4.6
2.5
6.7
6.5
8.0
5.8
7.0
4.0
0 2 4 6 8 10
Structural setting
Private sector soundness
Government debt
Government balance
Monetary stability
Current account
I nternational liquidity
Foreign debt
Political situation
min max
Pillar scores