Assessment of government debt security of emerging markets: theory and practice

Abstract

This study came to inspect a new approach to the government debt security assessment based on the systematization of indicators in terms of four directions: solvency, liquidity, domestic indebtedness, and external indebtedness. The proposed methodology considers the weaknesses, which negatively affect the level of government debt security. It was established that in 2014−2016 the level of security at emerging markets was the worst. The main reason was insufficient solvency. Also, the obtained results showed that the general assessment of domestic indebtedness in recent years had a more dangerous level than the external one. In addition, it was revealed that similar problems with the level of debt burden are also presented in the EU countries since the value of the analyzed indicator – general government debt to GDP – exceeds 60%. It is recommended to consider the experience of debt management reform of new members of the EU and, at the same time, post-socialist countries by other emerging economies.

Keywords

• domestic indebtedness
• emerging markets
• external indebtedness
• government debt security
• liquidity
• solvency