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Konrad Reuss Standard & Poors

Financial Integration and Risk Mitigation in Southern Africa: UNDP/S&P Ratings Initiative OECD policy seminar 25 – 26 March. Konrad Reuss Standard & Poors. Number of Standard & Poor's Sovereign Credit Ratings. Distribution of FX Sovereign Ratings 1975-2003. ODA vs. FDI vs. MDGs.

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Konrad Reuss Standard & Poors

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  1. Financial Integration and Risk Mitigation in Southern Africa:UNDP/S&P Ratings InitiativeOECD policy seminar 25 – 26 March Konrad Reuss Standard & Poors

  2. Number of Standard & Poor'sSovereign Credit Ratings

  3. Distribution of FX Sovereign Ratings 1975-2003

  4. ODA vs. FDI vs. MDGs • ODA flows have been declining: • Peak in 1990 of US$ 63.5 billion • Down to US$ 34 billion in 2002 • Private capital flows to developing countries surpassed ODA going from US$ 60bn to US$ 150bn • Africa received 2.3% of the world FDI, and only 0.7% of world equity investment. • No single African country under the top 20 FDI recipients; flows to 23 of the continent’s 53 countries declined in 2002. • FDI to Africa fell to US$ 11billion in 2002 from US$ 19 billion in 2001 • US$ 50 billion investment needed annually between now and 2015 needed to achieve MDGs

  5. Strategic Objectives • Enhance resource mobilisation through strengthening domestic financial systems. • Improve developing countries access to foreign direct investment and other private capital flows.

  6. Ratings and LDCs • The traditional use of sovereign ratings vs. the needs of LDC • Are sovereign ratings a sufficient or necessary condition for promoting capital flows to LDCs? • Do sovereign ratings provide new information, that is not already available?

  7. Africa – Sovereign Ratings History • South Africa: BB (Oct. 94); BB+ (Nov. 95); BBB- (Feb. 2000); BBB (May 2003) • Senegal: B+ (Dec. 2000) • Botswana: A (April 2001) • Ghana: B+ (Sept. 2003) • Cameroon: B (Nov. 2003) • Benin: B+ (Dec. 2003) • Burkina Faso: B (March 2004)

  8. Per capita GDP (in USD)

  9. Real per capita GDP (% chg.)

  10. Government deficit-to-GDP

  11. Government Debt-to-GDP

  12. Conclusions • Ratings have to be seen as part of the wider range of initiatives in the context of NEPAD, MDGs and AGOA • The combined effect could open the way toward integrating Africa into global capital markets.

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