Guidance Note on Debt Sustainability Analysis for Market Access Countries

Policy Papers, July 3, 2008

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Since the endorsement by the Executive Board in June 2002 of the paper on “Assessing Sustainability” (May 28, 2002), the Fund has followed a more systematic approach to assessing public and external debt sustainability in the context of both program design and Article IV surveillance.
The framework—further refined in a subsequent paper, “Sustainability Assessments—Review of Application and Methodological Refinements” (June 10, 2003)—attempts to bring a greater degree of consistency and discipline to sustainability analyses, including by laying bare the basis on which baseline projections are made and subjecting them systematically to sensitivity tests.
As part of continuing efforts to improve debt sustainability analysis (DSA) and responding to the concerns of some of the shareholders as well the experience with the framework thus far, further modifications were made in July 2005 (Information Note On Modifications To The Fund’s Debt Sustainability Assessment Framework For Market Access Countries, July 1, 2005).
This note provides information on the use of the latest version of the DSA template for market access countries, that is, for countries not included in the low-income (PRGF-eligible) country group.

May 28, 2002: “Assessing Sustainability” paper (Executive Board endorsement in June 2002).
June 10, 2003: “Sustainability Assessments—Review of Application and Methodological Refinements.”
July 1, 2005: Information Note On Modifications To The Fund’s Debt Sustainability Assessment Framework For Market Access Countries.
July 3, 2008: Date of this Guidance Note.

Systematic approach to assessing public and external debt sustainability in program design and Article IV surveillance.
Emphasis on consistency and discipline in sustainability analyses.
Requirement to lay bare the basis for baseline projections.
Systematic use of sensitivity tests to probe vulnerabilities and alternative scenarios.
Availability and use of a DSA template tailored for market access countries (excluding low-income PRGF-eligible countries).

Targeted at market access countries (countries not included in the low-income (PRGF-eligible) country group).
Intended for use in both program design and Article IV surveillance to assess public and external debt sustainability.

Source: Guidance Note on Debt Sustainability Analysis for Market Access Countries (July 3, 2008).