Reform of the Policy on Public Debt Limits in IMF-Supported Programs

Policy Papers, November 11, 2020

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Canonical URL: Reform of the Policy on Public Debt Limits in IMF-Supported Programs

This paper evaluates the IMF’s policy on the use of quantitative limits on public debt in IMF-supported programs (the “debt limits policy”) and proposes a number of modifications.
The review is taking place:
- at a time when many countries are experiencing heightened debt vulnerabilities or actual debt distress,
- aggravated by the COVID-19 shock,
- and occurring against the backdrop of a changing credit landscape in which concessional finance is scarcer relative to countries’ investment needs.

Evaluation of the debt limits policy governing quantitative limits on public debt in IMF-supported programs.
Proposals for modifications to the debt limits policy.
Contextual drivers emphasized:
- heightened debt vulnerabilities and actual debt distress,
- the COVID-19 shock,
- a changing credit landscape with concessional finance scarcer relative to countries’ investment needs.

Subject: Asset and liability management, Concessional external borrowing, Debt limits, Debt sustainability, External debt, Government debt management, Public debt, Public financial management (PFM)
Keywords: Africa, Concessional external borrowing, debt conditionality, Debt limits, debt limits policy, Debt sustainability, debt vulnerability, financing arrangement, fund staff, Global, Government debt management, heightened debt vulnerability, low income countries, PP