Paper short abstract:

This study uses new World Bank data to statistically compare the political and economic factors driving bilateral lending to the Global South from emerging BRICS donors to those of traditional Paris Club lenders, and explores whether the BRICS offer better or worse terms than traditional creditors.

Paper long abstract:

A paucity of data has thus far made systematic quantitative analysis of emerging bilateral donors such as China a major challenge. This study takes advantage of new World Bank data on the sovereign creditors of a panel of 120 low- and middle-income countries from 2000-2019 to first chart the growing importance of key emerging donors during the twenty-first century, focusing on the BRICS (Brazil, Russia, India, China and South Africa), before statistically analyzing the political, strategic, and economic factors that drive their lending and investigating whether they are different from the “traditional” (mostly) Western donors that comprise the Paris Club . Finally, using data on the average grant elements, interest rates, and grace periods of bilateral official loans to the same panel of borrowers, this study will analyze whether low- and middle-income countries which borrow proportionately more from the emerging bilateral donors tend to receive better or worse terms than those who stick to the conventional Paris Club lenders. Given the growing importance of countries such as the BRICS as bilateral creditors, a more systematic comparative understanding of their motives and behavior has substantial policy relevance, in particular in the wake of COVID-19 induced debt distress across much of the developing world.