## 2026 Review of Low-Income Countries Debt Sustainability Framework

## Source details

**Canonical URL:** [2026 Review of Low-Income Countries Debt Sustainability Framework](https://www.imf.org/en/topics/2026-review-of-low-income-countries-debt-sustainability-framework)

## Other formats

- [Markdown version](/en/topics/2026-review-of-low-income-countries-debt-sustainability-framework/index.md)
- [Structured JSON version](/en/topics/2026-review-of-low-income-countries-debt-sustainability-framework/index.json)
- [Bundle manifest](/en/topics/2026-review-of-low-income-countries-debt-sustainability-framework/bundle-manifest.json)

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### Overview and purpose
- The 2026 Low-Income Countries Debt Sustainability Framework (LIC-DSF) Review is a joint IMF–World Bank exercise that aims to future-proof the framework, ensuring it remains fit for purpose as debt risks, financing patterns, and analytical tools evolve.
- The Debt Sustainability Framework for Low-Income Countries (LIC-DSF) is a joint analytical framework developed jointly by the International Monetary Fund (IMF) and the World Bank.
- The LIC-DSF is used to analyze public debt stress and sustainability in countries eligible for concessional financing from either institution.
- Since its introduction in 2005, the LIC-DSF has been the cornerstone of the international community’s assessment of risks to debt sustainability in LICs, with important operational implications for stakeholders.
- Primary objectives:
  - Support the IMF and World Bank policy advice and lending decisions.
  - Help guide fiscal policies and public debt management in low-income countries, balancing the need to finance growth and development with keeping debt vulnerabilities in check.

### Rationale for the 2026 Review
- The debt landscape since the 2017 reform has become more risky and complex for LICs at a time of:
  - elevated development needs,
  - falling official development assistance,
  - rising borrowing costs.
- Borrowing patterns have become more heterogeneous across the country grouping, with frontier and other relatively wealthier LICs making greater use of borrowing on commercial terms.
- The 2026 LIC-DSF Review aims to ensure the framework remains fit for purpose as debt risks, financing patterns, and analytical tools continue to evolve.

### Key upgrades introduced by the 2026 Review
- The 2026 LIC-DSF review builds on the strength of the current framework and introduces upgrades in three key areas:
  1. Refining measurement and thresholds
     - Brings greater rigor to the analysis of risks to debt sustainability by better differentiating between countries facing some risk of debt stress and countries whose debts are assessed as unsustainable.
     - Refines the measurement of countries’ debt-carrying capacity.
     - Recalibrates and expands the scope of the thresholds that signal debt stress.
     - Introduces new tools to assess debt sustainability.
  2. Broadening the lens on debt risks
     - More systematically analyzes domestic debt vulnerabilities.
     - Better reflects long-term challenges.
     - Allows countries to better assess how much fiscal space might be available to support needed investment in development and climate adaptation efforts while containing debt vulnerabilities over the long term.
     - Provides a key tool to guide decision-making around investment and adaptation trade-offs.
  3. Enhancing objectivity and data quality
     - Further develops the realism tools and stress tests that support the consistency and accuracy of forecasts.
     - Refines and streamlines the criteria for debt coverage.
     - Incentivizes countries to improve the quality, breadth, transparency, and reliability of public debt data used in the debt sustainability analyses.

### Expected characteristics and balance
- The review emphasizes keeping the LIC-DSF:
  - tractable and easy to use,
  - more comprehensive,
  - forward-looking,
  - better aligned with the evolving challenges facing low-income countries.

### Documents produced in the Review
- Review of the Bank-Fund Debt Sustainability Framework for Low-Income Countries – Proposed Reforms
  - The paper proposes a set of reforms to ensure that the IMF–World Bank LIC-DSF remains fit for purpose and future-proof in the face of heightened debt vulnerabilities, greater heterogeneity across LICs, and analytical advances since the 2017 Review.
- Background Note on Engagement with External Stakeholders
  - Provides details on the extensive engagement with a diverse array of external stakeholders undertaken by IMF and World Bank staff in the course of the Review of LIC-DSF.

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## References

- [Sovereign Risk and Debt Sustainability Analysis for Market Access Countries](https://www.imf.org/en/publications/dsa/sovereign-risk-and-debt-sustainability-analysis-for-market-access-countries)
- [Review of the Bank-Fund Debt Sustainability Framework for Low-Income Countries – Proposed Reforms](https://www.imf.org/en/publications/policy-papers/issues/2026/09/21/review-of-the-bank-fund-debt-sustainability-framework-for-low-income-countries-proposed-579765)
- [Background Note on Engagement with External Stakeholders](https://www.imf.org/en/publications/policy-papers/issues/2026/09/21/review-of-the-bank-fund-debt-sustainability-framework-for-low-income-countries-background-579760)

_Source: https://www.imf.org/en/topics/2026-review-of-low-income-countries-debt-sustainability-framework_