The Debt Sustainability Framework for Low-Income Countries
Occasional Papers, February 25, 2009
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Bibliographic details
- Authors: Christian H. Beddies, Marie-Helene Le Manchec, Bergljot B Barkbu
- Published: February 25, 2009
- Series: Occasional Papers
- DOI: https://doi.org/10.5089/9781589067929.084
Summary
- Low-income countries continue to face significant challenges in meeting their vast development needs while maintaining a sustainable debt position, even after many of these countries have benefited from substantial debt relief.
- Challenges are further exacerbated by changes in the financial landscape, including:
- the emergence of new creditors and investors;
- the use of more complex financing vehicles;
- the development of domestic markets.
- The joint World Bank/IMF debt sustainability framework is positioned to help address these challenges and reduce the risks of renewed episodes of debt distress.
- This paper explains the analytical underpinnings of the framework and the means to ensure its full effectiveness.
Key findings and analytical focus
- The framework provides an analytical basis for assessing debt sustainability in low-income countries (LICs).
- Core analytical themes include:
- Debt service and debt sustainability analysis.
- External debt and public debt dynamics.
- Identification of distress thresholds and debt-service difficulty.
- Consideration of LIC borrowing decisions and financing strategies.
- Geographic and thematic scope highlighted in keywords: Africa, Western Hemisphere, Global, LIC, LICS' development.
Implications for policy and practice
- The framework aims to inform policy by:
- Helping manage the trade-off between meeting development needs and maintaining sustainable debt positions.
- Guiding the assessment of risks from new creditors, complex instruments, and evolving domestic markets.
- Reducing the risk of renewed episodes of debt distress through improved analytical underpinnings and implementation measures.
Source: The Debt Sustainability Framework for Low-Income Countries, Christian H. Beddies, Marie-Helene Le Manchec, Bergljot B Barkbu, February 25, 2009 (Occasional Paper No. 2009/001).
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- I Overview