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OECD Sovereign Borrowing Outlook 2021

image of OECD Sovereign Borrowing Outlook 2021

This edition of the OECD Sovereign Borrowing Outlook reviews developments in response to the COVID-19 pandemic for government borrowing needs, funding conditions and funding strategies in the OECD area. It discusses the implications of the COVID-19 crisis on sovereign refinancing risk, and how to identify, measure and mitigate refinancing risk in light of country experiences. It then examines debt issuance trends for government securities in emerging market and developing economies in recent years, and presents novel insights on the impact of the COVID-19 pandemic on issuance conditions in these economies.

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Sovereign borrowing outlook for OECD countries

The year 2020 witnessed a massive increase in sovereign borrowing needs. This was the result of both a surge in government spending and reduced revenue collection due to the COVID-19 crisis. With record-low interest rates reducing the cost of borrowing and robust demand for government securities, sovereign issuers in the OECD area have successfully adapted their issuance strategies to the changing environment and significantly increased debt issuance without undermining the functioning of sovereign bond markets. As sovereigns’ financing needs for debt repayments are soaring, persistent global uncertainties call for prudent debt management.This chapter assesses the impact of the COVID-19 crisis on sovereign borrowing needs and debt issuance for 2020 and 2021. It looks at how sovereign debt management offices have been dealing with the large and unexpected increase in governments’ borrowing needs, including adjustments made to borrowing strategies and techniques. In view of continued global uncertainties and higher government refinancing needs, the chapter also provides recommendations to assist policy makers in their efforts to navigate through the crisis.

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