{
  "title": "External Conditions and Debt Sustainability in Latin America",
  "publication": "IMF Working Papers, January 30, 2013",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/external-conditions-and-debt-sustainability-in-latin-america-40282",
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  "summary": "Highly favorable external conditions have helped Latin America strengthen its economic fundamentals over the last decade. But, has the region built enough buffers to guard itself from a weakening of the external environment?",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Highly favorable external conditions have helped Latin America strengthen its economic fundamentals over the last decade.\n- The paper asks whether the region has built enough buffers to guard against a weakening of the external environment.\n- The paper develops a simple framework that integrates econometric estimates of the effect of global factors on key domestic variables that determine public and external debt dynamics with the IMF‘s standard debt sustainability framework.\n- Results suggest:\n  - Some countries in the region are well placed to withstand moderate or even large shocks.\n  - Many countries would benefit from having stronger buffers to be in a position to deploy countercyclical policies, especially under tail events.\n  - External sustainability does not appear to be a source of concern for most countries."
    },
    {
      "heading": "Methodology",
      "content": "- Framework components:\n  - Econometric estimates of the effect of global factors on key domestic variables that determine public and external debt dynamics.\n  - Integration with the IMF‘s standard debt sustainability framework."
    },
    {
      "heading": "Key findings and takeaways",
      "content": "- Buffer adequacy:\n  - Some countries: able to withstand moderate or large shocks.\n  - Many countries: need stronger buffers to enable countercyclical policy deployment under tail events.\n- External sustainability:\n  - Generally not a source of concern for most countries in Latin America, per the paper’s analysis."
    },
    {
      "heading": "Policy implications",
      "content": "- Strengthen fiscal and external buffers to increase resilience to adverse external shocks.\n- Position countries to be able to deploy countercyclical policies when facing tail events.\n\n---\n\n Content in this bundle\n\n- Wp1327\n  - Wp1327 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Wp1327 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/external-conditions-and-debt-sustainability-in-latin-america-40282"
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    "[Markdown version](/en/publications/wp/issues/2016/12/31/external-conditions-and-debt-sustainability-in-latin-america-40282/index.md)",
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    "Authors: Gustavo Adler, Sebastian Sosa",
    "Published: January 30, 2013",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475588835.001",
    "Highly favorable external conditions have helped Latin America strengthen its economic fundamentals over the last decade.",
    "The paper asks whether the region has built enough buffers to guard against a weakening of the external environment.",
    "The paper develops a simple framework that integrates econometric estimates of the effect of global factors on key domestic variables that determine public and external debt dynamics with the IMF‘s standard debt sustainability framework.",
    "Results suggest:",
    "Framework components:",
    "Buffer adequacy:",
    "External sustainability:",
    "Strengthen fiscal and external buffers to increase resilience to adverse external shocks.",
    "Position countries to be able to deploy countercyclical policies when facing tail events.",
    "**Wp1327**"
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