Evolution of Debt Sustainability Analysis in Low-Income Countries: Some Aggregate Evidence

57 Pages Posted: 1 Nov 2012

See all articles by Benedicte Baduel

Benedicte Baduel

affiliation not provided to SSRN

Robert Price

International Monetary Fund (IMF)

Date Written: June 2012

Abstract

The Debt Sustainability Analysis (DSA) for low-income countries (LICs) is a standardized analytical tool to monitor debt sustainability. This paper uses DSAs from three periods around the time of the global economic crisis to analyze the projected trajectories of debt ratios for a sample of LICs. The aggregate data suggest that LIC vulnerabilities improved on the whole during the period prior to the crisis, and that the crisis had a strong short-run impact on key ratios of debt (debt-to-GDP, -exports, and -fiscal revenues) and debt service (debt service-to-exports, and -revenues). Although projected debt burdens increased following the crisis, debt indicators tend to return to their pre-crisis levels over the projection horizon. This may reflect a strong and durable policy response by LICs towards the crisis, or also reflect specific assumptions on the long-run growth dividends of public external debt.

Keywords: Debt Sustainability, Low-income Countries, Debt Service Ratios, External Debt, Low-income Developing Countries, Macroeconomic - Aspects Of Public Finance

JEL Classification: E63, H63, H69

Suggested Citation

Baduel, Benedicte and Price, Robert, Evolution of Debt Sustainability Analysis in Low-Income Countries: Some Aggregate Evidence (June 2012). IMF Working Paper No. 12/167. Available at SSRN: https://ssrn.com/abstract=2169712

Benedicte Baduel (Contact Author)

affiliation not provided to SSRN ( email )

Robert Price

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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