Public Information Notice: IMF Discusses Assessments of Sustainability

The Enhanced HIPC Initiative and the Achievement of Long-Term External Debt Sustainability

Financial Sector Assessment Program (FSAP)



Assessing Sustainability

Prepared by the Policy Development and Review Department in consultation with the Fiscal Affairs, International Capital Markets, Monetary and Exchange Affairs, and Research Departments

Approved by Timothy Geithner

May 28, 2002

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Contents


I. Introduction
II. Analytical Background
III. Existing Work in the Fund
  A. External Sustainability
      Medium-term current account and balance of payments projections
      Current account and exchange rate assessments
  B. Fiscal Sustainability
     

Fiscal indicators

      Medium-term fiscal projections
  C. Financial Sector Stability
  D. Conclusions
IV. A Proposed Framework
V. Conclusions and Next Steps
Text Tables
1. Medium-Term Frameworks—BOP Information in Board Documents for the EMBI Global Emerging Market Countries
2. Medium-Term Frameworks—Fiscal Information in Board Documents for the EMBI Global Emerging Market Countries
3. External Sustainability Framework
4. Public Sector Debt Sustainability Framework
5. External Sustainability Framework Applied to Turkey (1999)
6. External Sustainability Framework Applied to Argentina (1999)
Figures
1. Projections of Public Debt to GDP Ratio: Selected Emerging Market Countries
2. Projections of Public Debt to GDP Ratio: Selected Emerging Market Countries
Text Boxes
Box 1:

Solvency, Liquidity, Sustainability, Vulnerability—Defining the Concepts

Box 2: Debt Sustainability in the Baltics, Russia, and Other States of the FSU
Box 3: Data Deficiencies in Undertaking Fiscal Sustainability Analyses.
Box 4: Good Practices for Realistic Fiscal Sustainability Assessments
Box 5: Calibrating the Sensitivity Tests
Appendix I. Assessing External Debt Sustainability—An Indicative Threshold Approach
Appendix II. Best Practices for Vulnerability Indicators
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