Global Development Finance 2006

The year 2005 was a landmark in global development finance. Private capital flows to developing countries reached a record net level of $483 billion, much of them going to middle–income countries that took advantage of the surge to improve their external debt profile and build official reserves of foreign exchange.  For the poorer countries, which have limited access to market-based external finance, the development community stepped up efforts to enhance aid flows and to reduce debt burdens through new multilateral debt-relief initiatives endorsed by the G-8 group of industrial countries in July 2005.

Global Development Finance 2006 highlights this unique opportunity to bolster development efforts and place development finance on a stable footing. The report discusses the structural transformation and mainstreaming of emerging debt markets, the increased importance of the Euro, the fast-growing phenomenon of credit default swap transactions on emerging sovereign and corporate names, and the greater reliance in developing countries on local currency financing. It also highlights the difficult challenge that many emerging market economies and oil exporters face in managing the large inflows of foreign exchange generated from capital flows and trade transactions.