Evolution of Debt Sustainability Analysis in Low-Income Countries: Some Aggregate Evidence

June 1, 2012

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Benedicte Baduel, and Robert T Price. Evolution of Debt Sustainability Analysis in Low-Income Countries: Some Aggregate Evidence, (USA: International Monetary Fund, 2012) accessed September 20, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The Debt Sustainability Analysis (DSA) for low-income countries (LICs) is a standardized analytical tool to monitor debt sustainability. This paper uses DSAs from three periods around the time of the global economic crisis to analyze the projected trajectories of debt ratios for a sample of LICs. The aggregate data suggest that LIC vulnerabilities improved on the whole during the period prior to the crisis, and that the crisis had a strong short-run impact on key ratios of debt (debt-to-GDP, -exports, and -fiscal revenues) and debt service (debt service-to-exports, and -revenues). Although projected debt burdens increased following the crisis, debt indicators tend to return to their pre-crisis levels over the projection horizon. This may reflect a strong and durable policy response by LICs towards the crisis, or also reflect specific assumptions on the long-run growth dividends of public external debt.

Subject: Debt burden, Debt service, Debt sustainability, Debt sustainability analysis, External debt

Keywords: Debt burden, Debt burden, Debt management, Debt ratio, Debt ratio numerator, Debt service, Debt sustainability, Debt sustainability analysis, DSA, Foreign direct investment, Global, LIC debt, LIC debt burden, LIC debt sustainability, LIC debt vulnerability, Low-income countries, Low-income country, Nominal GDP, Risk rating, Vintage DSAs, World Bank DSAs, WP

Publication Details

Pages:

56
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/167
Stock No:

WPIEA2012167
ISBN:

9781475505153
ISSN:

1018-5941

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