Benchmarking Dynamically Stable Public Debt Trajectories for Low-Income Countries

ByPlamen K Iossifov, Ali Abbas, Lennart Niermann

April 10, 2026

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

In this paper, we develop two complementary approaches for benchmarking the public debt trajectories of Low-Income Countries (LICs) to assess their dynamic stability. We compare the evolution of the overall public debt-to-GDP ratios of reference LICs with the historical experiences of other countries with similar characteristics, which are now further down the path of economic development and have not experienced public debt stress events. We rely on both direct comparison and a novel application of the synthetic control method (SCM). These public debt trajectories that are dynamically stable from a historical perspective can provide insights into debt sustainability analyses for LICs.

Subject: Debt sustainability, Debt sustainability analysis, External debt, Fiscal policy, Fiscal stance, Public debt

Keywords: Debt Sustainability, Debt sustainability analysis, Dynamic Stability, Fiscal stance, Global, IMF working papers, Low-Income Countries, public debt trajectory, public debt-to-GDP ratio, ratios of Reference lics, scm robustness, Synthetic Control Method

Pages:
33
Volume:
2026
DOI:
https://doi.org/10.5089/9798229044363.001
Issue:
075
Series:
Working Paper No. 2026/075
Stock No:
WPIEA2026075
ISBN:
9798229044363
ISSN:
1018-5941

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