Modernizing the Framework for Fiscal Policy and Public Debt Sustainability Analysis

Policy Papers, August 5, 2011

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Canonical URL: Modernizing the Framework for Fiscal Policy and Public Debt Sustainability Analysis

Modernizing the framework for fiscal policy and public debt sustainability analysis (DSA) has become necessary, particularly in light of the recent crisis and rising sustainability concerns in some advanced economies.
The paper recognizes the inherently challenging nature of DSA but highlights areas where improvements are needed and makes both general and specific proposals on how this could be achieved.
It proposes moving to a risk-based approach to DSAs for all market-access countries, where the depth and extent of analysis would be commensurate with concerns regarding sustainability, while maintaining a reasonable level of standardization.

Recent crisis and rising sustainability concerns in some advanced economies have increased the need to modernize DSA frameworks.
DSA is inherently challenging; improvements are necessary in methods and presentation to better capture risks and sustainability concerns.
A balance is needed between standardization and tailoring analysis depth based on country risk.

Move to a risk-based approach to DSAs for all market-access countries:
- Depth and extent of analysis should be commensurate with concerns regarding sustainability.
- Maintain a reasonable level of standardization across DSAs.
Make both general and specific methodological improvements to enhance the quality and relevance of DSAs.

Publication title: Modernizing the Framework for Fiscal Policy and Public Debt Sustainability Analysis
Date: August 5, 2011
Format: Web landing page with a downloadable PDF option
Subject tags: Cross country analysis, Debt sustainability analysis, Developed countries, Emerging markets, Fiscal policy, Public debt

Source: Modernizing the Framework for Fiscal Policy and Public Debt Sustainability Analysis (August 5, 2011).