Country risk: Methodology
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Country risk: Methodology

Country risk results

To obtain the overall country risk score, Euromoney assigns a weighting to nine categories. These are political risk (25% weighting), economic performance (25%), debt indicators (10%), Debt in default or rescheduled (10%), credit ratings (10%), access to bank finance (5%), access to short-term finance (5%), access to capital markets (5%), forfaiting (5%).

Political risk (25% weighting): the risk of non-payment or non-servicing of payment for goods or services, loans, trade-related finance and dividends, and the non-repatriation of capital. Risk analysts give each country a score between 10 and zero - the higher, the better.

Economic performance (25%): based (1) on GNI (Atlas Method) figures per capita and (2) on results of Euromoney poll of economic projections.

Debt indicators (10%): calculated using these ratios from the World Bank's World Development Indicators 2004: total debt stocks to GNP (A), debt service to exports (B); current account balance to GNP (C). Developing countries which do not report complete debt data get a score of zero.

Debt in default or rescheduled (10%): scores are based on the ratio of rescheduled debt to debt stocks, taken from the World Bank's World Development Indicators 2004.OECD and developing countries which do not report under the debtor reporting system (DRS) score 10 and zero respectively.

Credit ratings (10%): nominal values are assigned to sovereign ratings from Moody's, Standard & Poors and Fitch IBCA. The higher the average value, the better. Where there is no rating, countries score zero.

Access to bank finance (5%): calculated from disbursements of private, long-term, unguaranteed loans as a percentage of GNP. Source: the World Bank's World Development Indicators 2004.

Access to short-term finance (5%): takes into account OECD consensus groups (source: ECGD) and short-term cover available from the US Exim Bank and Atradius UK.

Access to capital markets (5%): heads of debt syndicate and loan syndications rated each country's accessibility to international markets.

Discount on forfaiting (5%): reflects the average maximum Tenor for forfaiting. The maximum period of promissory note or bill of exchange from the issue date until its maturity date in the primary market, from the purchase/sale date to maturity in the secondary market data). Countries where forfaiting is not available score zero. We would like to thank Guy Brookes at Deutsche Bank, Simon Lay at London Forfaiting, Mezra Forfaiting, David Locking at Standard Bank, and West LB who kindly supplied data.

Regional rankings

To obtain this ranking the overall Global Country Risk results were broken down by region. In addition Transparency International's Corruption Perception Index was combined with the overall ranking to create a score out of 105. This combined total was then scaled down to a score out of 100. The difference in ranking and overall score between the original ranking and that incorporating the CPI data has been incorporated in the results.

We would like to thank Transparency International who kindly supplied the data as published in their Corruption Perceptions Index 2004.

A CPI 2004 Score relates to perceptions of the degree of corruption as seen by business people, academics and risk analysts, and ranges between 10 (highly clean) and 0 (highly corrupt). The Transparency International Corruption Perceptions Index 2004 charts levels of corruption in 183 countries.

No CPI scores were available for the Marshall Islands, Micronesia, New Caledonia, the Solomon Islands, Tonga, and Vanuatu.

Our thanks go to the analysts and economists and contributors.

Those who did not request anonymity were:

Guy Brooks, Deutsche Bank;

Barbara Dernovsek, UBS AG;

Francis Nicollas, Crédit Agricole;

Sruti Patel, Afrinvest;

Maxine Koster and team, CSFB;

Conrad Schuller, Erste Bank;

Mary Lou Walsh, PRS Group;

Barbara Thomas, D&B;

Alex Durrer, LGT Capital Management;

Gregor Eder, Dresdner Bank AG ;

Thierry Apoteker, TAC Applied Economic and Financial Research;

William Dugan, Summit Analytical Associates;

James Ker-Lindsay, Civilitas Research;

David Line, Asia Intelligence;

Jim Story, Royal Bank of Canada;

Helmut Bernkopf, HVB; Coface at;

Luigi Ruggerone, Banca Intesa;

Bernard Musyck, Frederick Institute of Technology, Cyprus;

FT Haner, Business Environment Risk Intelligence S.A;

Stefan Frank, Helaba Frankfurt;

Hans Slock, Ducroire/Delcredere;

Cyril Widdershoven, Mediterranean Energy Political Risk;

William Dugan, Summit Analytical Associates;

Mauro Toldo, Deka Bank;

Serdar Kaya,;

Llewellyn D. Howell, Femi Babarinde, Martin Sours, Andrew Inkpen, Mary Teagarden, Patrick Cronin, C. Roe Goddard, Kishore Dash, Thunderbird – The Garvin School of International Management;

Bijan Khajehpour, Atieh Bahar Consulting;

F. Tsuchiya, Nomura Securities;

Conrad Schuller, Erste Bank;

Donald R. Mackay, Canadian Foundation for the Americas;

We would also like to thank the Royal Institute of International Affairs (RIIA) at Chatham House in London for providing access to their facilities, experts and speakers.

Please contact Paul Pedzinski on 44 (0) 20 7779 8233 or with any questions.

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