given there with other variables suggested by theory. We also consider variables specific to the IBRD in accordance with Aylward and Thorne's finding that Fund-specific variables were important in explaining arrears to the IMF. The list of variables considered is much longer than most of the previous literature, and reflects our desire to attain a robust specification. We discuss the variables pertaining to economic risk, political risk, rescheduling history, and the external environment below, with emphasis on the areas where our choice of variables differs from or develops the existing literature.

## **3.1. Economic Risk Factors**

The choice of economic risk factors in much of the literature on external debt repayment has been guided by the results of an influential study, by Avramovic et al. (1964), of the factors influencing a country's ability to service its external debt. They identify shortterm liquidity factors, or traditional debt and financial ratios, and longer-term indicators of economic health and growth. It is possible that despite good, or improving economic fundamentals a developing country may be forced into a liquidity crisis if its reserves are insufficient, or its solvency situation is precarious, and as such these traditional debt ratios are likely to directly influence default. In contrast, structural variables reflecting the long-term economic health of the country are generally not direct causes of default, but countries with poor fundamentals are more likely to develop economic problems that do bring on default. [Dym, 1997] This suggests the need to consider longer time lags of these variables. The literature survey of Aylward and Thorne (1998) suggests that it is the debt and financial ratios that most consistently seem to be significant. They also find past repayment history to be important, but that the inclusion of the lagged dependent variable or other indicators of historical creditworthiness tends to render insignificant many of the other independent macroeconomic variables.

Table 2 lists all the variables used in this study. We group the economic risk factors into four categories: Debt and financial ratios, Resource Availability, Economic Conditions and Structural Factors, and Economic Policy Indicators. Debt and financial ratios pertaining to Official, Multilateral and IBRD Debt are considered alongside the traditional ratios for total debt stock. We discuss the variables that are not transparent or present difficulties of measurement in the next section.

# 3.1.1. Data on Debt Service Due

Historical information on debt service due is not available in an easily accessible format from any of the standard sources. However projected debt due for the following year is reported annually in the World Debt Tables/Global Development Finance Reports of the World Bank. Prior to 1991 these debt due projections are broken down into Principal and Interest due to Private and Official Creditors; from 1991 onwards one can obtain debt due to Comnnercial Banks and to Multilateral Creditors. The advantage of these projections is that the information is available annually and takes account of rescheduling agreements. A possible disadvantage is that the projections may be subject to error, and furthermore interest rates changes may mean that debt service due differs from projected debt service due. To investigate the accuracy of the debt service due projections, we compared debt 8