Unification of Discount Rates Used in External Debt Analysis for Low-Income Countries

Date: October 4, 2013
Electronic Access: Full Text

Summary:This paper proposes reforms to the discount rates used by the Bank and the Fund to (a) calculate the present value (PV) of the external debt of low-income countries (LICs) in debt sustainability analyses (DSAs) and (b) to calculate the grant element of individual loans. Consistent with the conclusions of the March 2013 review of the Fund’s debt limits policy, the paper proposes a single uniform discount rate to be used for these related operational purposes. It has been prepared as a joint product of Bank and Fund staff, with the exception of the decision, which is Fund-specific.

Series : Policy Paper
Subject(s): Discount rates | External debt | Low-income developing countries | Debt sustainability analysis | Executive Board decisions | Lapse of time approval