- Bergljot Barkbu, Marie-Helene Le Manchec, and Christian Beddies
- Published Date:
- February 2009
© 2008 International Monetary Fund
Production: IMF Multimedia Services Division
Typesetting: Alicia Etchebarne-Bourdin
Figures: Andrew Sylvester
The debt sustainability framework for low-income countries/Bergljot BjɈrnson Barkbu, Christian Beddies, and Marie-Hélène Le Manchec—[Washington, D.C.: International Monetary Fund], 2008.
p. cm. (Occasional paper, 0251-6365; 266)
Includes bibliographical references.
1. Debts, External—Developing countries. 2. Economic development—Developing countries. 3. Developing countries—Economic policy. I. Beddies, Christian H. II. Le Manchec, Marie-Hélène. III. International Monetary Fund. IV. Occasional paper (International Monetary Fund); 266.
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The following conventions are used in this publication:
In tables, a blank cell indicates “not applicable,” ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.
An en dash (-) between years or months (for example, 2007-08 or January-June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2007/08) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2008).
“Billion” means a thousand million; “trillion” means a thousand billion.
“Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼of 1 percentage point).
As used in this publication, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.
Low-income countries (LICs) often struggle with debt problems, both domestic and external. And debt problems constrain their economic and social development. Recently, debt burdens have been reduced in many LICs through debt relief under two initiatives: the Heavily Indebted Poor Countries Initiative and the Multilateral Debt Relief Initiative. Looking ahead, LICs will continue to need resources to finance their many development needs in a sustainable manner, without entering new episodes of debt distress. To help the analysis of reasonableness of the debt policies of LICs and to avert undue buildups of debt in the future, the IMF and the World Bank have developed a joint analytical framework called the Debt Sustainability Framework (DSF). This paper explains the analytical underpinnings of the DSF and suggests how it could be used more widely by countries, donors, and creditors.
The paper was prepared by a team comprising staff members from the IMF's Strategy, Policy, and Review Department (SPR). The team included Bergljot Barkbu, Christian Beddies, and Marie-Hélène Le Manchec. Overall supervision was exercised by Martine Guerguil (Division Chief), Hervé Joly (Deputy Division Chief), and Adnan Mazarei (Assistant Director) in SPR. We, the authors, wish to express our gratitude to a large number of IMF and World Bank staff who contributed to the drafting of numerous Board papers on the DSF that eventually led to the production of this paper. Without implicating them in the analysis and views expressed in this paper, we would like to mention Patricia Alonso-Gamo, Birgir Arnason, Gabriel Di Bella, Andrew Berg, Zuzana Brixiova, Christina Daseking, Jan Gottschalk, Mumtaz Hussain, Samir Jahjah, Carlos Leite, Jan Kees Martijn, Mauro Mecagni, Tokhir Mirzoev, Perry Perone, Laure Redifer, Bjoern Rother, Carlo Sdralevich, Gabriel Sterne, Ben Umansky, and Felipe Zanna (IMF) and Luca Bandiera, Dörte Dömeland, Aart Kraay, Vikram Nehru, Gaobo Pang, Frederico Gil Sander, Mark Roland Thomas, and Sona Varma (World Bank). We are also grateful to numerous reviewers who provided valuable input. The authors are also indebted to Julieta del Milagro Caunedo for excellent research assistance, to Lorna Campbell and Shannon Mockler for outstanding administrative and organizational support, and to Esha Ray of the External Relations Department for editorial assistance and overseeing the production of the publication.
The views expressed in this paper are those of the authors, however, and do not necessarily reflect the views of national authorities, the IMF, or IMF Executive Directors.
Central Bank of HaitiCIRR
Commercial interest reference rateCPIA
Country Policy and Institutional AssessmentDAC
Development Assistance Committee (OECD)DSA
Debt sustainability analysisDSF
Debt Sustainability FrameworkECG
Working Group on Export Credits and Credit GuaranteesFDI
Foreign direct investmentGDP
Gross domestic productHIPC
Heavily Indebted Poor CountryHOPE
Act Haitian Hemispheric Opportunity Through Partner Encouragement ActIDA
International Development AssociationIMF
International Monetary FundLIC
Millennium Development GoalsMDRI
Multilateral Debt Relief InitiativeMEF
Ministry of Economy and FinancesMIC
Medium-term debt strategyNPV
Net present valueOECD
Organization for Economic Cooperation and DevelopmentPRGF
Poverty Reduction and Growth FacilityPV
Strategy, Policy, and Review Department