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Primary Surpluses and sustainable Debt Levels in Emerging Market Countries

Author/Editor: Abiad, Abdul | Ostry, Jonathan David
Authorized for Distribution: October 1, 2005
Electronic Access: Free Full Text (PDF file size is 366KB)
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Disclaimer: This Policy Discussion Paper should not be reported as representing the views of the IMF. The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Policy Discussion Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper aims to put some constraints on the way primary surpluses are projected when making assessments of public debt sustainability. Projections should be tied either to the country's historical track record in generating surpluses-if the institutional and other factors accounting for this track record are expected to persist-or to some model that links primary surpluses to their fundamental determinants, either on the basis of constant institutions and policies or a credible reform program. History-based or model-based primary surplus projections provide a useful benchmark for judging the realism of fiscal forecasts underlying debt sustainability calculations. Together with information on future growth and interest rates, the primary surplus projections can be used to generate measures of overborrowing, and the magnitude of adjustment needed to return debt to a sustainable level.
 
Series: Policy Discussion Paper No. 05/6
Subject(s): Public debt | Emerging markets
 
English  
    Published:   October 1, 2005        
            Format:   Paper
    Stock No:   PPIEA2005006   Pages:   18
    Price:   US$15.00
       
     
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