Debt Sustainability Analysis for Market-Access Countries

The Fund has adopted a systematic approach to assessing public and external debt sustainability. The approach differentiates between market-access countries,that have significant access to international capital markets, and low-income countries, which meet their external financing needs mostly through concessional resources. The sustainability assessments for public and external debt of both types of countries are conducted in the context of both IMF program design and Article IV surveillance and are performed through standardized templates.

Sustainability assessments help to analyze whether the proposed policies involve a sustainable debt path. To do so, the dynamics and trajectories of the debt ratios are assessed to determine whether the country meets solvency and liquidity conditions. The analysis is conducted under a baseline scenario, which reflects the authorities’ intended policies and a set of alternative scenarios, which aims at stress-testing the baseline.

This framework was introduced in June 2002 (see "Assessing Sustainability") and subsequently refined in June 2003 and July 2005 (see "Sustainability Assessments-Review of Application and Methodological Refinements" and Information Note On Modifications To The Fund's Debt Sustainability Assessment Framework For Market-Access Countries).

DSAs for market-access countries are conducted annually on the basis of a standard template. They are included as an annex in Article IV consultation reports, which can be found by country. For further details on DSAs for low-income countries click here.