meantime, Tanzania (which took a $400 million loan from China in August 2009) and Zambia are seeking a credit rate in order to issue $500 million Eurobonds later this year, after they had to postpone their plans in 2008 (together with Angola, Kenya and Uganda) because of the global financial crisis. At the same time, several HIPCs, which developed local-currency bond markets, have succeeded in selling treasury bills in their own currency to foreign investors. In 2008 the share of domestic debt held by foreign investors was 13% in Zambia, about 11% in Ghana, estimated at more than $400 million, and likewise significant in Tanzania and Uganda (Delechat et al. 2010, Domeland and Kharas 2009).

On the less bright side, Côte d’Ivoire, a HIPC that has not yet reached completion point, after exchanging defaulted Brady bonds with a 22-year Eurobond worth $2300 million in April 2010, defaulted on the same bond in February 2011. Further insights into the ability of post-MDRI countries to access international financial markets can be gained from data on public and private borrowing from private creditors taken from the Global Development Finance (GDF) database of the World Bank.

Figure 1a reports the unweighted average of the ratios of yearly disbursements on long-term loans and bonds to GDP for two groups of IDA-only countries: the 21 HIPCs that received MDR in 2006 (post-MDRI countries);<sup>4</sup> and a control group of 15 countries that includes the remaining non-HIPC IDA-only countries but excludes resource rich Angola and Nigeria. The yearly amount of long-term borrowing by post-MDRI countries increased sharply from less than 0.3% of GDP in 2006 to more than 1% in 2007 to stabilize thereafter around 0.9% of GDP in the wake of the global crisis.

This performance is partly due to the low level of private inflows in the period up to 2006 when HIPC countries, being under IMF-supported programs, had to abide by stringent limits on non-concessional borrowing. However, Figure 1a shows that the increase in long-term borrowing from private lenders in relief-recipient countries was not much faster than in other non-HIPC IDA countries. Despite the latter group has an unweighted average debt-to-GDP ratio of 51%, higher than the 32% ratio of post-MDRI countries, in 2007 it also experienced a sustained increase in new borrowing; from 1.2 to 1.9% of GDP.

# —Insert Figure 1a—

Further evidence on private foreign lending to low-income countries can be obtained from data on the amount of international claims of the commercial banks of the 30 industrial countries reporting to the Bank of International Settlement (BIS). Although BIS data exclude loans from emerging lenders, they cover short-term loans that are not reported in the GDF statistics of the World Bank. Figure 1b shows banks’total financial claims in foreign currencies, on the same groups of countries considered above, on a consolidated basis,<sup>5</sup> and tells a similar story: while, after the full implementation of MDRI relief in 2006, foreign claims (relative to GDP) on post-MDRI countries have increased faster than in non-HIPC IDA-only countries, since then the two groups behaved quite similarly.

> 4 The MDRI group also includes Bolivia which is an IDA-blend country.

> 5 That is, net of accounts between head offi ces and their branches and subsidiaries.

4