Front Matter

Author(s):
Bergljot Barkbu, Marie-Helene Le Manchec, and Christian Beddies
Published Date:
February 2009
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    © 2008 International Monetary Fund

    Production: IMF Multimedia Services Division

    Typesetting: Alicia Etchebarne-Bourdin

    Figures: Andrew Sylvester

    Cataloging-in-Publication Data

    Barkbu, Bergljot

    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.

    ISBN 978-1-58906-792-9

    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.

    HJ8899.B375 2008

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    Contents

    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.

    Preface

    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.

    Abbreviations

    BRH

    Central Bank of Haiti

    CIRR

    Commercial interest reference rate

    CPIA

    Country Policy and Institutional Assessment

    DAC

    Development Assistance Committee (OECD)

    DSA

    Debt sustainability analysis

    DSF

    Debt Sustainability Framework

    ECG

    Working Group on Export Credits and Credit Guarantees

    FDI

    Foreign direct investment

    GDP

    Gross domestic product

    HIPC

    Heavily Indebted Poor Country

    HOPE

    Act Haitian Hemispheric Opportunity Through Partner Encouragement Act

    IDA

    International Development Association

    IMF

    International Monetary Fund

    LIC

    Low-income country

    MDG

    Millennium Development Goals

    MDRI

    Multilateral Debt Relief Initiative

    MEF

    Ministry of Economy and Finances

    MIC

    Middle-income country

    MTDS

    Medium-term debt strategy

    NPV

    Net present value

    OECD

    Organization for Economic Cooperation and Development

    PRGF

    Poverty Reduction and Growth Facility

    PV

    Present value

    SPR

    Strategy, Policy, and Review Department

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