Country Risk Analysis

GWU – IBI – MINERVA PROGRAM

COUNTRY RISK ANALYSIS

RENATO DONATELLO RIBEIRO [e-mail]

COUNTRY RISK ANALYSIS
I – INTRODUCTION II – HISTORY OF THE THEME A- Sources of data B- Rating Agencies III – METHODS OF ANALYSIS A – Methodologies B – The Basic data IV – PURPOSE OF THE ANALYSIS V – CONTENTS OF ANALYSIS A – Country history B – Country risk as a corporate risk 1. Dependency Level C – External Environment D – Ratios for economic risk evaluation 1. Domestic Side - Fiscal Policy - Monetary Policy 2. External Side E – Domestic financial system F – Conjunctural aspects G – The world`s viewpoint H – Strengthens and Weakness chart VI – RISK LEVEL AND EXPOSURE LIMITS VII – PRICING SYSTEM VIII – FOLLOW UP IX - CONCLUSIONS

I - INTRODUCTION

Creating the present country risk work emerged from the necessity of finding conclusive answers on about accepting or not some credit risks, specially those ones represented by the possibility of restriction of payment, imposed by a country. Furthermore, it is important to observe that the capacity of payment of a debtor may be deeply threatened if some macroeconomic instabilities affect its commercial environment, constraining its activity as a whole. Nowadays, such issues are getting more relevant around the world, for the so called globalization has led the countries towards economic disclosures, essential for keeping them competitive. So, an increasing number of companies are taking advantage of the external trade, which represents huge business opportunities as much as the possibility of buying products and, mainly, the development of new profitable and promising markets. The financial institutions, while financing the commercial flow among nations, are trying and taking advantages of such opportunities as well. On the other hand, out of the commercial extent, new business opportunities are realized to those ones who are interested on investing extra

values abroad through direct investments or

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