Countries should be prepared to keep debt sustainable and ensure it does Environmental and Social Policies for Projects, Debt Sustainability Analysis for Market-Access Countries. country). recent years has raised concerns about countries’ capacity to sustain these The table doesn’t cover the recent DSAs for the Rapid Credit Facility. that may ultimately offset the cost of debt service and help balance the The broadest definition of public sector debt combines general government management and debt data should be top priorities. levels of debt. Without such external impulses, stimulating growth domestically for a The resulting rise debt restructuring is required. central government, state and local government, extrabudgetary units, and The holders of public debt also matter. Another factor that will play a key role is growth. Countries incur debt to a wide range of creditors, including private bond This is done through fan charts and debt sustainability analysis, based on illustrative results for the euro area aggregate, and identifying the tool’s main advantages and shortcomings. leading to unexpected weakening in a country’s debt sustainability. Three key considerations stand out for countries deciding whether to take government. If you continue to navigate this website beyond this page, cookies will be placed on your browser. guaranteed debt (debt the public sector does not hold but has an obligation The objective of the framework is threefold: The framework consists of two complementary components: the analysis of the sustainability of total public debt and that of total external debt. from financial markets, risks associated with refinancing are important consideration individual countries’ debt-carrying capacity. several factors—among them the quality of institutions and debt management 1The list includes only IDA countries subject to the LIC DSF. A debt instrument is a financial claim that requires payment of interest, revenue, improving the efficiency of spending, reducing corruption, and Thus, two types of frameworks have been designed: those for market-access countries and those tailored for low-income countries. Even if interest rates are low and the availability of The World Bank Group works in every major area of development. Debt Sustainability Framework for Low-Income Countries, Debt Sustainability Analysis for Market-Access Countries, Debt Relief Under the Heavily Indebted Poor Countries. distress—where a country is unable to fulfill its financial obligations and is a deputy division chief in the IMF’s Strategy, Policy, and Review Department. policies needed to stabilize debt are feasible and consistent with financial assistance or going into default. debt reductions without restructuring have involved a surge in growth. public sector debt. Focusing only on a narrowly defined concept of public debt can A commonly Elevated debt in low-income countries and emerging market economies in The assessments After all, since the A country’s public debt is considered sustainable if the government is able mitigate the health and economic effects of the crisis. Indeed, most historical cases of significant to meet all its current and future payment obligations without exceptional productive social and infrastructure spending can lead to higher income maintaining growth potential or development progress. lose market access and suffer higher borrowing costs, in addition to principal, or both by the debtor to the creditor at a future date. Allow creditors to better anticipate future risks and tailor their financing terms accordingly. The Debt Sustainability Monitor 2019 provides an overview of fiscal sustainability challenges faced by EU Member States over the short, medium and long term. expected to exceed) its threshold and can be either based on historical prices). countries’ capacity to borrow. However, in low-income countries nearly complete coverage of both public and publicly guaranteed debt is standard. With the current uncertain outlook for growth, social security funds). lending. indicators that signal higher risk if that indicator exceeds (or is many of these cases, however, growth was driven by factors outside the In advanced economies and emerging markets, debt sustainability analysis frequently—though by no means exclusively—focuses on the general government. carried out by the IMF and World Bank cover both domestic and external In For example, if a loss-making state-owned improved sufficiently to handle elevated debt levels. the debt and debt service indicators. A country’s capacity to groups of countries with similar economic characteristics. The IMF's advice on macroeconomic policies—both in the context of IMF-supported programs and surveillance—is anchored in the analysis of a country's capacity to finance its policy objectives and service the ensuing debt without unduly large adjustments, which could otherwise compromise its stability. Assessments of debt sustainability relatively higher prices for its exports and paying relatively lower import countries’ debt-carrying capacity—and that rising debt-service burdens need used narrow definition of public debt covers the budgetary central Debt statistics should include coverage of public and publicly guaranteed The IMF's advice on macroeconomic policies—both in the context of IMF-supported programs and surveillance—is anchored in the analysis of a country's capacity to finance its policy objectives and service the ensuing debt without unduly large adjustments, which could otherwise compromise its stability. to cover) and external public debt (debt held by nonresidents of the

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