Evolution of Debt Sustainability Analysis in Low-Income Countries: Some Aggregate Evidence
IMF Working Papers, June 1, 2012
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- Evolution of Debt Sustainability Analysis in Low-Income Countries: Some Aggregate Evidence
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Bibliographic details
- Authors: Benedicte Baduel, Robert T Price
- Published: June 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475505153.001
Overview and purpose
- The Debt Sustainability Analysis (DSA) for low-income countries (LICs) is a standardized analytical tool to monitor debt sustainability.
- This paper uses DSAs from three periods around the time of the global economic crisis to analyze the projected trajectories of debt ratios for a sample of LICs.
Key findings (aggregate evidence)
- LIC vulnerabilities improved on the whole during the period prior to the crisis.
- The crisis had a strong short-run impact on key debt ratios:
- debt-to-GDP
- debt-to-exports
- debt-to-fiscal revenues
- The crisis also had a strong short-run impact on debt service ratios:
- debt service-to-exports
- debt service-to-revenues
- Although projected debt burdens increased following the crisis, debt indicators tend to return to their pre-crisis levels over the projection horizon.
Interpretation and possible explanations
- The observed return of debt indicators to pre-crisis levels over the projection horizon may reflect:
- a strong and durable policy response by LICs towards the crisis, or
- specific assumptions on the long-run growth dividends of public external debt.
Content in this bundle
- 1. Sample Countries