Radical Debt Transparency Report

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The Radical Debt Transparency report—an update to 2021’s Debt Transparency in Developing Countries—shows that despite significant improvements in recent years, major debt transparency deficiencies continue to plague many developing countries. As the global financing environment tightens, several governments are turning to off-budget and increasingly complex debt instruments such as collateralized loans, private placements, and central bank swaps, that risk giving rise to new hidden debts. Gaps in legislative frameworks, institutional fragmentation, and limited oversight can contribute to debt reporting challenges, as seen in recent experiences. Transparency in debt restructuring processes also remains uneven. This report calls for a radical shift toward debt transparency as critical to debt sustainability, urging legislative reforms, stronger oversight of unconventional debt, broader loan-level reporting, and greater use of automation and reconciliation tools.

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    Chapter 1: Transparency in Debt Reporting

    Transparency in debt reporting is grounded in the borrower’s primary responsibility to publish accurate, comprehensive, and timely debt data— supported by creditor cooperation to ensure completeness and consistency. Public debt represents the largest financial portfolio in most developing countries, and it is primarily the responsibility of governments to regularly provide current data to their citizens, creditors, and policymakers. Failure to fully disclose this information can have significant financial repercussions and erode trust. Creditors also have a significant role to play by promoting transparent financing practices and providing detailed information about their lending portfolio, thus filling possible gaps in borrower’s statistics. In this chapter, we discuss recent developments in debt data disclosure. The first two sections analyze borrowers’ debt data disclosure practices, using the definitions of direct/ indirect reporting introduced in the 2021 report. The third section explores creditors’ reporting. The fourth section focuses on current efforts in ensuring reconciliation of creditors’ and borrowers’ debt data and the role that the international community, including the World Bank, can play in this effort.

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    Chapter 2: Transparency of Debt Instruments and Operations

    This chapter highlights recent trends in debt instruments or borrowing operations that raise transparency concerns. Section 2.1 investigates recent collateralized lending operations; Section 2.2 focuses on the increased use of private placements to tap external markets; Section 2.3 explores transparency in domestic debt issuances; Section 2.4 explores transparency in debt restructuring and Section 2.5 discusses the transparency of unconventional and novel financial instruments introduced in sovereign lending.

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    Chapter 3: Recommendations

    Given its importance to the international debt architecture, we need a decisive shift toward radical debt transparency. Recent cases of unreported debt have underscored the difficulties in extending debt statistics coverage and ensuring that timely and accurate information is widely available. These setbacks call for a renewed push for radical debt transparency, particularly the provision of accurate, comprehensive, and timely debt data by governments and adherence to transparent financing practices by creditors. Yet, further progress will depend on increased participation in transparency efforts by both debtors and creditors and improved international platforms and mechanisms. In addition, creditor scrutiny must be strengthened, and safeguards should be built into contracts, the global debt framework, and national systems. Overall, the standard for debt transparency must be significantly elevated. Based on the analysis in the previous chapters, this report offers a set of concrete actions and policy recommendations tailored to all key stakeholders: borrowers, creditors, and international financial institutions.