Primary Surpluses and sustainable Debt Levels in Emerging Market Countries

Author/Editor:

Jonathan David Ostry ; Abdul d Abiad

Publication Date:

October 1, 2005

Electronic Access:

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Disclaimer: This Policy Dicussion 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:

This paper aims to put some constraints on the way primary surpluses are projected when making assessments of public debt sustainability. Projections should be tied either to the country's historical track record in generating surpluses-if the institutional and other factors accounting for this track record are expected to persist-or to some model that links primary surpluses to their fundamental determinants, either on the basis of constant institutions and policies or a credible reform program. History-based or model-based primary surplus projections provide a useful benchmark for judging the realism of fiscal forecasts underlying debt sustainability calculations. Together with information on future growth and interest rates, the primary surplus projections can be used to generate measures of overborrowing, and the magnitude of adjustment needed to return debt to a sustainable level.

Series:

Policy Discussion Paper No. 05/6

English

Publication Date:

October 1, 2005

ISBN/ISSN:

9781451975703/1934-7456

Stock No:

PPIEA2005006

Format:

Paper

Pages:

19

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