Country risk poll: Methodology
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 is defined for this exercise as 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 score, the less risky the country.
Economic performance data are based (1) on GNI (Atlas Method) figures per capita and (2) on results of the Euromoney poll of economic projections.
Our thanks go to the analysts, economists and institutions below that contributed to the political risk and economic performance ratings:
Barbara Huynh-Dernovsek, UBS AG; Francis Nicollas, Crédit Agricole; Sruti Patel, Afrinvest ; Maxine Koster and team, CSFB; Conrad Schuller, Erste Bank; Kate Davies, 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; Ladan Mahboobi, Royal Bank of Canada.; Helmut Bernkopf, HVB; Sylvia Griesman at Coface at www.cofacerating.com; Luigi Ruggerone, Banca Intesa; Saruhan Hatipoglu, Business Environment Risk Intelligence; Stefan Frank, Helaba ; Hans Slock, ONDD; Cyril Widdershoven, Mediterranean Energy Political Risk Consultancy; William Dugan, Summit Analytical Associates; Takeshi Shigeoka, Nomura Securities; Richard Segal, Argo Capital; Alexander Lehmann, European Bank for Reconstruction and Development; YiYi Lu, Royal Institute of International Affairs, London; Mauro Toldo, DekaBank/Deutsche Girozentrale; Rashna Writer, Merchant International Group; Andriy Dmytrenko , Dragon Capital; James Lorge, Institute for Public Policy Research; Linda Yueh, London School of Economics; Naoko Oka, Sumitomo Shoji Research Institute; John Thomas, Harvard University; Gerhard Kinzelberger, österreichische Kontrollbank; Plamen Pantev, Institute for Security and International Studies (ISIS); Hans P Belscak, SJ Rundt & Associates; Marco Lier, Swiss Re; Robert Barlow, Willis; Mehrdad Khonsari, Centre for Arab and Iranian Studies; Denise Youngblood-Coleman, CountryWatch Inc; Simon Sole, Exclusive Analysis Limited; Jane Kinninmont, Business Monitor International; James McLeod-Hatch and team, AKE Ltd; Daniel Wagner, Asian Development Bank; Annick Trottier, Global Insight; Terry Emerson, KBC. We would also like to thank the Royal Institute of International Affairs in London for providing access to its facilities, experts and speakers.
Debt indicators are calculated using these ratios from the World Bank’s Early Release Global Development Finance 2006: total debt stocks to GNP (A), debt service to exports (B); current account balance to GNP (C). Developing countries that do not report complete debt data get a score of zero.
Debt in default or rescheduled scores are based on the ratio of rescheduled debt to debt stocks, taken from the World Bank’s Early Release Global Development Finance 2006. OECD and developing countries that do not report under the debtor reporting system (DRS) score 10 and zero respectively.
Credit ratings are based on nominal values assigned to sovereign ratings from Moody’s Investors Service, Standard & Poor’s, Fitch IBCA and Capital Intelligence. The higher the average value, the better. Where there is no rating, countries score zero.
Access to bank finance data are calculated from disbursements of private, long-term, unguaranteed loans as a percentage of GNP. Source: World Bank’s Early Release Global Development Finance 2006.
Access to short-term finance 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 data is derived from ratings by heads of debt syndicate and loan syndications of each country’s accessibility to international markets.
Discount on forfaiting 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 Simon Lay at London Forfaiting, Mezra Forfaiting, David Locking at Standard Bank, and WestLB for data.
To obtain this ranking, the overall global country risk results were broken down by region. In addition, Transparency International’s Extended 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, which supplied the data as published in its Corruption Perceptions Index 2005 (list of all countries including those with fewer than three data points).
A CPI 2005 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.
Please contact Paul Pedzinski on + 44 (0) 20 7779 8233 or firstname.lastname@example.org with any questions