Crowding out is a situation that arises when excessive government borrowing hinders credit to the private sector imf, 2017 improving revenue mobilisation is key for debt. Debt sustainability framework for low income countries nihal kappagoda paper presented at the workshop on debt, finance and emerging issues in financial integration, london, march 67, 2007. Debt sustainability diagnostics despite the debt buildup in 20092012, the economy did not show any serious sign of debt distress as the debt to. The objective of grants in ida15 is to help lowincome countries to restore or maintain their external debt sustainability. The debt sustainability framework for lowincome countries lic dsf key messages to avoid a recurrence of debt distress as they make use of the new sources of borrowing to finance development ambitions, dmfeligible countries need capacity to closely monitor debt sustainability and fiscal risks. Introduction under the world bank fund debt sustainability framework a debt sustainability analysis dsa should be prepared annually for all idaonly, prgf eligible countries jointly with the imf. What does the latest literature say on the strengths and weaknesses. A framework to assess debt sustainability and fiscal risks under the belt and road initiative 1. Debt sustainability framework debt sustainability analysis cambodia dmf stakeholders forum june 34, 2015, manila, philippines thirong pen deputy director general general department of budget ministry of economy and finance kingdom of cambodia 1. Jun 01, 2018 the framework comes from the adf policy innovation lab, which began work in late 2015 on the debt sustainability implications of less concessional oda in terms of volumes, terms or both going forward.
The grant allocation framework first introduced in ida14 has only one criterion for grant eligibility. The debt sustainability framework for lowincome countries. The elements of sovereign debt sustainability analysis cigi. First, the framework for dsa has to define the relevant constraints for. Debt sustainability framework for participating countries of the belt. International monetary fund 2017 debt sustainability framework for lowincome countries 4. The multilateral debt relief initiative m dri was created in 2005 to enhance the hipc debt initiative and ensure that multilateral development banks are fully compensated for the debt relief they provide. Review of the debt sustainability framework for low income. This paper provides a framework to assess the impact of infrastructure investment expected under the belt and road. Pdf on oct 6, 2016, danny cassimon and others published the imfwb debt sustainability framework. This debt sustainability framework hereinafter referred to as bridsf is applicable to the debt sustainability analysis dsa of bri low income. It facilitates the monitoring of key financial risks, and establishes. The approach to debt sustainability analysis dsa followed by the imf and.
Provide a framework for joint debt sustainability analyses by the bank and their share is of the order of 10 percent of total official assistance. Greek debt sustainability and official crisis lending. Fiscal space is defined as the distance between the current debt. List of boxes, figures and tables ii glossary iii executive summary vi 1 introduction. Sustainable lending supports a borrowing countrys economic and social progress without endangering its financial future and longterm development prospects.
While it may be hard to precisely assess insolvency versus illiquidity, a systematic analysis of indicators, debt ratios, resource gap analysis and an analysis of the medium term sustainability of the debt profile can provide a sensible assessment of whether solvency at stake. The joint world bankinternational monetary fund debt sustainability framework dsf was introduced in april 2005, and is periodically. Civil society position on the imf and world bank debt. With 189 member countries, staff from more than 170 countries, and offices in over locations, the world bank group is a unique global partnership. A framework to assess debt sustainability and fiscal risks. Assist low income countries that benefited from debt relief to avoid the future.
Iv the use of the debt sustainability framework by borrowers. Review of the debt sustainability framework for low income countries. Jul 03, 2018 what matters is the sustainability of longrun growth and development for which debt sustainability is a necessary condition, not an end in itself. Three reasons explain the labs focus on public debt. C2 sustainability of public finances esm workshop on debt sustainability. September 2728 2004 nihal kappagoda, research associate, the northsouth institute nancy c. Ifads governing council adopted the dsf in 2007 see gc 29l.
The imf and the world bank have developed a framework to help guide countries and donors in mobilizing the financing of lics development needs, while reducing the chances of an excessive buildup of debt in the future. It is argued that any framework for dsa must take three elements into account. The debt sustainability framework dsf was launched by multilateral. Pdf a stochastic framework for public debt sustainability. Modernizing the framework for fiscal policy and public debt sustainability analysis dsa has become necessary, particularly in light of the recent crisis and rising sustainability concerns in some advanced economies. The risk ratings emerge from countryspecific forwardlooking debt sustainability analyses based on the joint imfworld bank debt.
The eligible projects conform to the categories defined in the gbp 2018 and sbg 2018. Conceptual framework the adf lab focused on public debt sustainability in examining the implications of mcls. It became clear from this work adf lab 2016, felino and pinto 2017. This paper proposes a framework for public debt sustainability analysis dsa that is complementary to that generally used by ifis. Debt sustainability debt is sustainable if the country or. The debt sustainability framework dsf is the framework within which dsas are produced. In contrast, the imfworld bank debt sustainability framework for lowincome countries dsf assesses debt distress in relation to total external debt, public plus private. The joint world bankimf debt sustainability framework for lowincome countries licdsf is a methodology for conducting standardized debt sustainability analysis. The distressing debt sustainability framework of the imf and. The debt sustainability framework and its use by donors and lenders. The objective of grants in ida17 is to help lowincome countries to restore or maintain their external debt sustainability.
The empirical framework for ret to fiscal sustainability has been developed by. The world bankimf debt sustainability framework dsf for. Guidance note on the bankfund debt sustainability framework. Pdf debt sustainability framework for low income countries. Debt sustainability framework debt sustainability analysis. Debt sustainability and debt management in developing. Pdf risk management for sovereign financing within a. The analytical process elaborates seven concepts that together assemble the theoretical framework of sustainable development and each concept represents distinctive meanings of the theoretical framework. Data is as at 20, sourced from the world bank databank note. Pdf on jan 1, 2018, marialena athanasopoulou and others published risk management for sovereign financing within a debt sustainability framework find, read and cite all the research you need. Pdf analytical framework for fiscal sustainability.
Debt sustainability frameworks dsfs were adopted by multilateral financial institutions as part of the global architecture to address the challenges of debt distress and reaccumulation of debt in the poorest countries. Factsheet the joint world bankimf debt sustainability. A key part of the framework is debt sustainability analysis dsa. The joint world bankimf debt sustainability framework for low. The debt sustainability framework for lowincome countries lic dsf key messages to avoid a recurrence of debt distress as they make use of the new sources of borrowing to finance development ambitions, dmfeligible. Debt sustainability framework for participating countries of. A framework to assess debt sustainability and fiscal risks under. Use of proceeds, process for project evaluation and selection, management of proceeds and reporting. While recognizing the inherently challenging nature of such analysis, this paper highlights areas where improvements are. Debt sustainability and debt management in developing countries. A new conceptual framework for sustainable development.
Modernizing the framework for fiscal policy and public. Modernizing the framework for fiscal policy and public debt. First, the framework for dsa has to define the relevant constraints for assessing what is a state of sustainable debt. Policy and resource implications paper submitted for the g24 technical group meeting washington, d. Ministry of finance zambias debt management strategy for. The com fiscal debt sustainability analysis framework stephanie pamies sumner european commission ecfin. Debt sustainability framework for low income countries. The world bankimf debt sustainability framework dsf for lics overview and recent changes 1 presentation by sudarshan gooptu acting director, economic policy and debt department. The framework complements and augments the traditional debt sustainability analysis framework by facilitating assessment of the costs and risks of desired debt composition. The debt sustainability analysis is a tool that is used as part of a framework developed by the world bank and the international monetary fund to help guide countries and donors in mobilizing critical financing for lowincome countries, while reducing the chances of an excessive buildup of debt. The ministry of finance has taken the initiative to publish the medium term debt strategy mtds for the information of market participants investors and stakeholders on the objectives of debt management pursued by the government.
Debt sustainability framework for lowincome countries pdf. How to do a debt sustainability analysis for lowincome countries. Guidance note on the bankfund debt sustainability framework for low income countries english abstract. The debt sustainability framework for lowincome countries lic dsf has been thecornerstone of assessments of risks to debt sustainability in lics. Alexander, director, citizens network on essential services. Debt sustainability framework for participating countries.
Introduction borrowing, both by governments and private entities, is an important tool for financing investment. Debt burdens have been reduced, thanks in large part to international debt relief. Lowincome countries lics have often struggled with large external debts. Bank debt sustainability framework for low income countries hereinafter referred to as licdsf, as well as the national conditions and development stages of bri countries, we formulate this debt sustainability framework with the aim to promote sustainable economic and social development of bri countries while ensuring debt sustainability. Debt sustainability and development implications of. The 2017 version of the imf and world banks lic debt. Sustainable lending practices are important to safeguard debt sustainability in lics. Sustainability framework dsf is a standardized framework for conducting debt sustainability analysis dsa in lowincome countries lics jointly developed. Review of ifads debt sustainability framework dsf and. The com fiscal debt sustainability analysis framework.