Abstract
The IMF staff report on Mexico’s financial policies has been satisfactory; these policies have been said to act as a buffer against risks that erupted during the global economic crisis. Mexico has been identified as a prudent and fairly well-managed economy. However, the issues that would pose a challenge to the financial sector and would hamper overall economic stability of the country were emphasized, and certain key areas that need attention on a priority basis were highlighted.
Fiscal Debt Sustainability Analysis
Mexico’s public debt is moderate and is projected to remain stable over the medium term under the baseline scenario, at around 43 percent of GDP. Standard DSA bound tests suggest that public debt would remain at moderate levels under standard shocks. Moreover, Mexico’s balanced-budget framework is a strong fiscal anchor against the materialization of such scenarios.
Public Debt Sustainability: Bound Tests 1/2/
(Public debt in percent of GDP)
Citation: IMF Staff Country Reports 2012, 316; 10.5089/9781475523126.002.A002
Sources: International Monetary Fund, country desk data, and staff estimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ For historical scenarios, the historical averages are calculated over the ten-year period, and the information is used to project debt dynamics five years ahead.3/ This mechanical exercises assumes that the budget rule does not hold.4/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and primary balance.5/ One-time real depreciation of 30 percent and 10 percent of GDP shock to contingent liabilities occur in 2010, with real depreciation defined as nominal depreciation (measured by percentage fall in dollar value of local currency) minus domestic inflation (based on GDP deflator).Public Debt Sustainability: Bound Tests 1/2/
(Public debt in percent of GDP)
Citation: IMF Staff Country Reports 2012, 316; 10.5089/9781475523126.002.A002
Sources: International Monetary Fund, country desk data, and staff estimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ For historical scenarios, the historical averages are calculated over the ten-year period, and the information is used to project debt dynamics five years ahead.3/ This mechanical exercises assumes that the budget rule does not hold.4/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and primary balance.5/ One-time real depreciation of 30 percent and 10 percent of GDP shock to contingent liabilities occur in 2010, with real depreciation defined as nominal depreciation (measured by percentage fall in dollar value of local currency) minus domestic inflation (based on GDP deflator).Public Debt Sustainability: Bound Tests 1/2/
(Public debt in percent of GDP)
Citation: IMF Staff Country Reports 2012, 316; 10.5089/9781475523126.002.A002
Sources: International Monetary Fund, country desk data, and staff estimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ For historical scenarios, the historical averages are calculated over the ten-year period, and the information is used to project debt dynamics five years ahead.3/ This mechanical exercises assumes that the budget rule does not hold.4/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and primary balance.5/ One-time real depreciation of 30 percent and 10 percent of GDP shock to contingent liabilities occur in 2010, with real depreciation defined as nominal depreciation (measured by percentage fall in dollar value of local currency) minus domestic inflation (based on GDP deflator).Public Sector Debt Sustainability Framework, 2007–2017
(In percent of GDP, unless otherwise indicated)
Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.
Derived as [(r - π(1+g) - g + αε(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate; α = share of foreign-currency denominated debt; and ε = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).
The real interest rate contribution is derived from the denominator in footnote 2/ as r - π (1+g) and the real growth contribution as -g.
The exchange rate contribution is derived from the numerator in footnote 2/ as αε(1+r).
For projections, this line includes exchange rate changes.
Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.
Derived as nominal interest expenditure divided by previous period debt stock.
Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year.
Public Sector Debt Sustainability Framework, 2007–2017
(In percent of GDP, unless otherwise indicated)
| Actual | Projections | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Debt-stabilizing primary balance 9/ | ||||
| Baseline: Public sector debt 1/ | 37.8 | 43.1 | 44.5 | 42.9 | 43.8 | 43.1 | 43.2 | 43.2 | 43.1 | 43.0 | 42.9 | 0.2 | |||
| o/w foreign-currency denominated | 10.2 | 12.8 | 12.0 | 10.0 | 10.8 | 9.9 | 9.4 | 8.8 | 8.3 | 7.8 | 7.0 | ||||
| Change in public sector debt | −0.5 | 5.3 | 1.4 | −1.7 | 1.0 | −0.7 | 0.1 | 0.0 | −0.1 | −0.1 | −0.1 | ||||
| Identified debt-creating flows (4+7+12) | −2.4 | −0.1 | 7.1 | 0.7 | 0.9 | −1.6 | −1.0 | −1.0 | −0.9 | −0.9 | −0.8 | ||||
| Primary deficit | −1.5 | −1.4 | 3.3 | 2.2 | 1.0 | 0.0 | −0.5 | −0.7 | −0.8 | −0.9 | −0.9 | ||||
| Revenue and grants | 21.4 | 23.0 | 22.3 | 22.2 | 22.1 | 22.8 | 22.9 | 22.9 | 23.2 | 22.7 | 22.3 | ||||
| Primary (noninterest) expenditure | 19.9 | 21.6 | 25.5 | 24.4 | 23.0 | 22.8 | 22.4 | 22.2 | 22.3 | 21.9 | 21.4 | ||||
| Automatic debt dynamics 2/ | −0.6 | 2.4 | 3.1 | −2.0 | 0.0 | −1.2 | −0.1 | 0.1 | 0.2 | 0.2 | 0.3 | ||||
| Contribution from interest rate/growth differential 3/ | −0.5 | −0.2 | 3.6 | −1.4 | −1.3 | −1.2 | −0.1 | 0.1 | 0.2 | 0.2 | 0.3 | ||||
| Of which contribution from real interest rate | 0.6 | 0.3 | 1.0 | 0.9 | 0.2 | 0.4 | 1.4 | 1.5 | 1.5 | 1.6 | 1.7 | ||||
| Of which contribution from real GDP growth | −1.1 | −0.4 | 2.6 | −2.3 | −1.5 | −1.5 | −1.4 | −1.4 | −1.3 | −1.3 | −1.3 | ||||
| Contribution from exchange rate depreciation 4/ | 0.0 | 2.5 | −0.5 | −0.6 | 1.3 | … | … | … | … | … | … | ||||
| Other identified debt-creating flows | −0.4 | −1.0 | 0.7 | 0.4 | 0.0 | −0.4 | −0.4 | −0.3 | −0.3 | −0.2 | −0.2 | ||||
| Privatization receipts (negative) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Recognition of implicit or contingent liabilities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Other (transfers to stabilization funds: '-' indicates net inflows) | −0.4 | −1.0 | 0.7 | 0.4 | 0.0 | −0.4 | −0.4 | −0.3 | −0.3 | −0.2 | −0.2 | ||||
| Residual, including asset changes (2-3) 5/ | 1.9 | 5.4 | −5.7 | −2.3 | 0.1 | 0.8 | 1.0 | 1.0 | 0.9 | 0.8 | 0.7 | ||||
| Public sector debt-to-revenue ratio 1/ | 176.8 | 187.6 | 199.7 | 193.2 | 198.5 | 189.2 | 188.6 | 188.7 | 186.2 | 189.4 | 192.3 | ||||
| Gross financing need 6/ | 8.2 | 8.8 | 16.6 | 13.3 | 10.7 | 10.8 | 10.6 | 10.6 | 10.2 | 10.2 | 10.4 | ||||
| in billions of U.S. dollars | 84.8 | 96.7 | 147.0 | 138.0 | 123.7 | 125.4 | 128.3 | 135.3 | 137.0 | 143.7 | 154.0 | ||||
| Scenario with key variables at their historical averages 7/ | 43.1 | 43.3 | 43.4 | 43.4 | 43.4 | 43.4 | -0.5 | ||||||||
| Scenario with no policy change (constant primary balance) in 2012-2017 | 43.1 | 43.7 | 44.4 | 45.1 | 45.9 | 46.7 | 0.2 | ||||||||
| Key Macroeconomic and Fiscal Assumptions Underlying Baseline | |||||||||||||||
| Real GDP growth (in percent) | 3.2 | 1.2 | −6.0 | 5.6 | 3.9 | 3.8 | 3.5 | 3.5 | 3.3 | 3.3 | 3.3 | ||||
| Average nominal interest rate on public debt (in percent) 8/ | 7.5 | 7.2 | 6.2 | 6.3 | 6.2 | 6.4 | 6.5 | 6.7 | 6.9 | 7.1 | 7.2 | ||||
| Average real interest rate (nominal rate minus change in GDP deflator, in percent) | 1.9 | 0.8 | 2.0 | 2.4 | 0.8 | 1.1 | 3.5 | 3.7 | 3.9 | 4.0 | 4.2 | ||||
| Nominal appreciation (increase in US dollar value of local currency, in percent) | 0.1 | −19.7 | 3.7 | 5.7 | −11.7 | … | … | … | … | … | … | ||||
| Inflation rate (GDP deflator, in percent) | 5.6 | 6.4 | 4.2 | 3.9 | 5.4 | 5.3 | 3.0 | 3.0 | 3.1 | 3.1 | 3.0 | ||||
| Growth of real primary spending (deflated by GDP deflator, in percent) | 4.3 | 9.4 | 11.4 | 0.8 | −1.8 | 2.6 | 1.8 | 2.6 | 3.9 | 1.1 | 1.2 | ||||
| Primary deficit | −1.5 | −1.4 | 3.3 | 2.2 | 1.0 | 0.0 | −0.5 | −0.7 | −0.8 | −0.9 | −0.9 | ||||
Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.
Derived as [(r - π(1+g) - g + αε(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate; α = share of foreign-currency denominated debt; and ε = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).
The real interest rate contribution is derived from the denominator in footnote 2/ as r - π (1+g) and the real growth contribution as -g.
The exchange rate contribution is derived from the numerator in footnote 2/ as αε(1+r).
For projections, this line includes exchange rate changes.
Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.
Derived as nominal interest expenditure divided by previous period debt stock.
Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year.
Public Sector Debt Sustainability Framework, 2007–2017
(In percent of GDP, unless otherwise indicated)
| Actual | Projections | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Debt-stabilizing primary balance 9/ | ||||
| Baseline: Public sector debt 1/ | 37.8 | 43.1 | 44.5 | 42.9 | 43.8 | 43.1 | 43.2 | 43.2 | 43.1 | 43.0 | 42.9 | 0.2 | |||
| o/w foreign-currency denominated | 10.2 | 12.8 | 12.0 | 10.0 | 10.8 | 9.9 | 9.4 | 8.8 | 8.3 | 7.8 | 7.0 | ||||
| Change in public sector debt | −0.5 | 5.3 | 1.4 | −1.7 | 1.0 | −0.7 | 0.1 | 0.0 | −0.1 | −0.1 | −0.1 | ||||
| Identified debt-creating flows (4+7+12) | −2.4 | −0.1 | 7.1 | 0.7 | 0.9 | −1.6 | −1.0 | −1.0 | −0.9 | −0.9 | −0.8 | ||||
| Primary deficit | −1.5 | −1.4 | 3.3 | 2.2 | 1.0 | 0.0 | −0.5 | −0.7 | −0.8 | −0.9 | −0.9 | ||||
| Revenue and grants | 21.4 | 23.0 | 22.3 | 22.2 | 22.1 | 22.8 | 22.9 | 22.9 | 23.2 | 22.7 | 22.3 | ||||
| Primary (noninterest) expenditure | 19.9 | 21.6 | 25.5 | 24.4 | 23.0 | 22.8 | 22.4 | 22.2 | 22.3 | 21.9 | 21.4 | ||||
| Automatic debt dynamics 2/ | −0.6 | 2.4 | 3.1 | −2.0 | 0.0 | −1.2 | −0.1 | 0.1 | 0.2 | 0.2 | 0.3 | ||||
| Contribution from interest rate/growth differential 3/ | −0.5 | −0.2 | 3.6 | −1.4 | −1.3 | −1.2 | −0.1 | 0.1 | 0.2 | 0.2 | 0.3 | ||||
| Of which contribution from real interest rate | 0.6 | 0.3 | 1.0 | 0.9 | 0.2 | 0.4 | 1.4 | 1.5 | 1.5 | 1.6 | 1.7 | ||||
| Of which contribution from real GDP growth | −1.1 | −0.4 | 2.6 | −2.3 | −1.5 | −1.5 | −1.4 | −1.4 | −1.3 | −1.3 | −1.3 | ||||
| Contribution from exchange rate depreciation 4/ | 0.0 | 2.5 | −0.5 | −0.6 | 1.3 | … | … | … | … | … | … | ||||
| Other identified debt-creating flows | −0.4 | −1.0 | 0.7 | 0.4 | 0.0 | −0.4 | −0.4 | −0.3 | −0.3 | −0.2 | −0.2 | ||||
| Privatization receipts (negative) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Recognition of implicit or contingent liabilities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Other (transfers to stabilization funds: '-' indicates net inflows) | −0.4 | −1.0 | 0.7 | 0.4 | 0.0 | −0.4 | −0.4 | −0.3 | −0.3 | −0.2 | −0.2 | ||||
| Residual, including asset changes (2-3) 5/ | 1.9 | 5.4 | −5.7 | −2.3 | 0.1 | 0.8 | 1.0 | 1.0 | 0.9 | 0.8 | 0.7 | ||||
| Public sector debt-to-revenue ratio 1/ | 176.8 | 187.6 | 199.7 | 193.2 | 198.5 | 189.2 | 188.6 | 188.7 | 186.2 | 189.4 | 192.3 | ||||
| Gross financing need 6/ | 8.2 | 8.8 | 16.6 | 13.3 | 10.7 | 10.8 | 10.6 | 10.6 | 10.2 | 10.2 | 10.4 | ||||
| in billions of U.S. dollars | 84.8 | 96.7 | 147.0 | 138.0 | 123.7 | 125.4 | 128.3 | 135.3 | 137.0 | 143.7 | 154.0 | ||||
| Scenario with key variables at their historical averages 7/ | 43.1 | 43.3 | 43.4 | 43.4 | 43.4 | 43.4 | -0.5 | ||||||||
| Scenario with no policy change (constant primary balance) in 2012-2017 | 43.1 | 43.7 | 44.4 | 45.1 | 45.9 | 46.7 | 0.2 | ||||||||
| Key Macroeconomic and Fiscal Assumptions Underlying Baseline | |||||||||||||||
| Real GDP growth (in percent) | 3.2 | 1.2 | −6.0 | 5.6 | 3.9 | 3.8 | 3.5 | 3.5 | 3.3 | 3.3 | 3.3 | ||||
| Average nominal interest rate on public debt (in percent) 8/ | 7.5 | 7.2 | 6.2 | 6.3 | 6.2 | 6.4 | 6.5 | 6.7 | 6.9 | 7.1 | 7.2 | ||||
| Average real interest rate (nominal rate minus change in GDP deflator, in percent) | 1.9 | 0.8 | 2.0 | 2.4 | 0.8 | 1.1 | 3.5 | 3.7 | 3.9 | 4.0 | 4.2 | ||||
| Nominal appreciation (increase in US dollar value of local currency, in percent) | 0.1 | −19.7 | 3.7 | 5.7 | −11.7 | … | … | … | … | … | … | ||||
| Inflation rate (GDP deflator, in percent) | 5.6 | 6.4 | 4.2 | 3.9 | 5.4 | 5.3 | 3.0 | 3.0 | 3.1 | 3.1 | 3.0 | ||||
| Growth of real primary spending (deflated by GDP deflator, in percent) | 4.3 | 9.4 | 11.4 | 0.8 | −1.8 | 2.6 | 1.8 | 2.6 | 3.9 | 1.1 | 1.2 | ||||
| Primary deficit | −1.5 | −1.4 | 3.3 | 2.2 | 1.0 | 0.0 | −0.5 | −0.7 | −0.8 | −0.9 | −0.9 | ||||
Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.
Derived as [(r - π(1+g) - g + αε(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate; α = share of foreign-currency denominated debt; and ε = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).
The real interest rate contribution is derived from the denominator in footnote 2/ as r - π (1+g) and the real growth contribution as -g.
The exchange rate contribution is derived from the numerator in footnote 2/ as αε(1+r).
For projections, this line includes exchange rate changes.
Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.
Derived as nominal interest expenditure divided by previous period debt stock.
Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year.
External Debt Sustainability Analysis
Mexico’s external-debt-to GDP ratio continues to be low and sustainable, and is expected to remain stable over the medium-term. In the most extreme shock—a 30 percent real exchange rate depreciation—the debt-to-GDP ratio would increase to 37 percent, which is still a moderate level. Mitigating factors include the fact that a larger share of Mexico’s (public) debt is now denominated in pesos, and Mexico has taken advantage of low interest rates and the recognition of its strong macroeconomic fundamentals to lengthen the maturity structure of its external debt. Other shocks, including to interest rates, current account and growth have only a marginal impact on Mexico’s debt-to-GDP ratio.
External Debt Sustainability: Bound Tests 1/2/
(External debt in percent of GDP)
Citation: IMF Staff Country Reports 2012, 316; 10.5089/9781475523126.002.A002
Sources: International Monetary Fund, Country desk data, and staff estimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ For historical scenarios, the historical averages are calculated over the ten-year period, and the information is used to project debt dynamics five years ahead.3/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and current account balance.4/ One-time real depreciation of 30 percent occurs in 2012.External Debt Sustainability: Bound Tests 1/2/
(External debt in percent of GDP)
Citation: IMF Staff Country Reports 2012, 316; 10.5089/9781475523126.002.A002
Sources: International Monetary Fund, Country desk data, and staff estimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ For historical scenarios, the historical averages are calculated over the ten-year period, and the information is used to project debt dynamics five years ahead.3/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and current account balance.4/ One-time real depreciation of 30 percent occurs in 2012.External Debt Sustainability: Bound Tests 1/2/
(External debt in percent of GDP)
Citation: IMF Staff Country Reports 2012, 316; 10.5089/9781475523126.002.A002
Sources: International Monetary Fund, Country desk data, and staff estimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ For historical scenarios, the historical averages are calculated over the ten-year period, and the information is used to project debt dynamics five years ahead.3/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and current account balance.4/ One-time real depreciation of 30 percent occurs in 2012.External Debt Sustainability Framework, 2007–2017
(In percent of GDP, unless otherwise indicated)
Derived as [r - g - ρ(1+g) + αε(1+r)]/(1+g+ρ+gρ) times previous period debt stock, with r = nominal effective interest rate on external debt; ρ = change in domestic GDP deflator in US dollar terms, g = real GDP growth rate, ε = nominal appreciation (increase in dollar value of domestic currency), and α = share of domestic-currency denominated debt in total external debt.
The contribution from price and exchange rate changes is defined as [-ρ(1+g)+ αε(1+r)]/(1+g+ρ+gρ) times previous period debt stock. ρ increases with an appreciating domestic currency (ε> 0) and rising inflation (based on GDP deflator).
For projection, line includes the impact of price and exchange rate changes.
Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.
Goods and non-factor services.
Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP) remain at their levels of the last projection year.
External Debt Sustainability Framework, 2007–2017
(In percent of GDP, unless otherwise indicated)
| Actual | Projections | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Debt-stabilizing non-interest current account 7/ | ||||
| Baseline: External debt | 19.0 | 18.8 | 22.1 | 23.9 | 24.3 | 27.4 | 28.1 | 28.0 | 27.6 | 27.1 | 25.7 | -1.3 | |||
| Change in external debt | 1.0 | −0.2 | 3.3 | 1.8 | 0.4 | 3.1 | 0.7 | −0.1 | −0.3 | −0.5 | −1.4 | ||||
| Identified external debt-creating flows (4+8+9) | −2.8 | −0.9 | 3.2 | −4.5 | −2.5 | −1.4 | −1.2 | −1.3 | −1.3 | −1.4 | −1.3 | ||||
| Current account deficit, excluding interest payments | −0.5 | 0.1 | −0.8 | −0.9 | −0.6 | −0.7 | −0.5 | −0.3 | −0.3 | −0.4 | −0.6 | ||||
| Deficit in balance of goods and services | 1.6 | 2.2 | 1.5 | 1.3 | 1.4 | 1.3 | 1.4 | 1.6 | 1.6 | 1.5 | 1.4 | ||||
| Exports | 27.9 | 28.2 | 27.7 | 30.3 | 31.6 | 33.7 | 34.2 | 34.3 | 34.8 | 35.2 | 36.0 | ||||
| Imports | 29.5 | 30.5 | 29.2 | 31.6 | 33.0 | 34.9 | 35.7 | 35.9 | 36.4 | 36.8 | 37.4 | ||||
| Net non-debt creating capital inflows (negative) | −2.4 | −1.5 | −1.8 | −1.7 | −1.0 | −1.4 | −1.4 | −1.5 | −1.6 | −1.6 | −1.6 | ||||
| Automatic debt dynamics 1/ | 0.1 | 0.5 | 5.9 | −1.9 | −0.9 | 0.7 | 0.6 | 0.5 | 0.6 | 0.7 | 0.8 | ||||
| Denominator: 1+g+r+gr | 1.1 | 1.1 | 0.8 | 1.2 | 1.1 | 1.0 | 1.0 | 1.1 | 1.1 | 1.1 | 1.1 | ||||
| Contribution from nominal interest rate | 1.6 | 1.5 | 1.4 | 1.3 | 1.5 | 1.6 | 1.5 | 1.4 | 1.5 | 1.5 | 1.7 | ||||
| Contribution from real GDP growth | −0.5 | −0.2 | 1.4 | −1.0 | −0.8 | −0.9 | −0.9 | −0.9 | −0.9 | −0.9 | −0.8 | ||||
| Contribution from price and exchange rate changes 2/ | −0.9 | −0.8 | 3.1 | −2.2 | −1.6 | … | … | … | … | … | … | ||||
| Residual, incl. change in gross foreign assets (2-3) 3/ | 3.8 | 0.7 | 0.1 | 6.4 | 3.0 | 4.5 | 1.9 | 1.2 | 1.0 | 0.9 | −0.1 | ||||
| External debt-to-exports ratio (in percent) | 68.1 | 66.5 | 79.8 | 78.9 | 77.0 | 81.4 | 82.1 | 81.5 | 79.5 | 77.0 | 71.4 | ||||
| Gross external financing need (in billions of US dollars) 4/ | 89.2 | 107.2 | 103.0 | 97.0 | 106.5 | 127.6 | 123.9 | 127.1 | 126.6 | 129.5 | 142.1 | ||||
| in percent of GDP | 8.6 | 9.8 | 11.7 | 9.4 | 9.2 | 11.0 | 10.3 | 10.0 | 9.5 | 9.2 | 9.5 | ||||
| Scenario with key variables at their historical averages 5/ | 27.4 | 27.6 | 27.4 | 27.1 | 26.7 | 25.3 | -1.3 | ||||||||
| Key Macroeconomic Assumptions Underlying Baseline | |||||||||||||||
| Real GDP growth (in percent) | 3.2 | 1.2 | −6.0 | 5.6 | 3.9 | 3.8 | 3.5 | 3.5 | 3.3 | 3.3 | 3.3 | ||||
| GDP deflator in US dollars (change in percent) | 5.4 | 4.5 | −14.2 | 11.1 | 7.2 | −3.0 | 0.5 | 1.8 | 1.8 | 2.1 | 2.1 | ||||
| Nominal external interest rate (in percent) | 9.5 | 8.2 | 6.0 | 7.2 | 7.1 | 6.7 | 5.9 | 5.4 | 5.5 | 5.8 | 6.5 | ||||
| Growth of exports (US dollar terms, in percent) 6/ | 8.8 | 6.9 | −20.9 | 28.3 | 16.3 | 7.2 | 5.7 | 5.6 | 6.5 | 6.8 | 7.8 | ||||
| Growth of imports (US dollar terms, in percent) 6/ | 9.7 | 9.1 | −22.7 | 26.9 | 16.4 | 6.7 | 6.2 | 6.0 | 6.7 | 6.5 | 7.3 | ||||
| Current account balance, excluding interest payments | 0.5 | −0.1 | 0.8 | 0.9 | 0.6 | 0.7 | 0.5 | 0.3 | 0.3 | 0.4 | 0.6 | ||||
| Net non-debt creating capital inflows | 2.4 | 1.5 | 1.8 | 1.7 | 1.0 | 1.4 | 1.4 | 1.5 | 1.6 | 1.6 | 1.6 | ||||
Derived as [r - g - ρ(1+g) + αε(1+r)]/(1+g+ρ+gρ) times previous period debt stock, with r = nominal effective interest rate on external debt; ρ = change in domestic GDP deflator in US dollar terms, g = real GDP growth rate, ε = nominal appreciation (increase in dollar value of domestic currency), and α = share of domestic-currency denominated debt in total external debt.
The contribution from price and exchange rate changes is defined as [-ρ(1+g)+ αε(1+r)]/(1+g+ρ+gρ) times previous period debt stock. ρ increases with an appreciating domestic currency (ε> 0) and rising inflation (based on GDP deflator).
For projection, line includes the impact of price and exchange rate changes.
Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.
Goods and non-factor services.
Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP) remain at their levels of the last projection year.
External Debt Sustainability Framework, 2007–2017
(In percent of GDP, unless otherwise indicated)
| Actual | Projections | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Debt-stabilizing non-interest current account 7/ | ||||
| Baseline: External debt | 19.0 | 18.8 | 22.1 | 23.9 | 24.3 | 27.4 | 28.1 | 28.0 | 27.6 | 27.1 | 25.7 | -1.3 | |||
| Change in external debt | 1.0 | −0.2 | 3.3 | 1.8 | 0.4 | 3.1 | 0.7 | −0.1 | −0.3 | −0.5 | −1.4 | ||||
| Identified external debt-creating flows (4+8+9) | −2.8 | −0.9 | 3.2 | −4.5 | −2.5 | −1.4 | −1.2 | −1.3 | −1.3 | −1.4 | −1.3 | ||||
| Current account deficit, excluding interest payments | −0.5 | 0.1 | −0.8 | −0.9 | −0.6 | −0.7 | −0.5 | −0.3 | −0.3 | −0.4 | −0.6 | ||||
| Deficit in balance of goods and services | 1.6 | 2.2 | 1.5 | 1.3 | 1.4 | 1.3 | 1.4 | 1.6 | 1.6 | 1.5 | 1.4 | ||||
| Exports | 27.9 | 28.2 | 27.7 | 30.3 | 31.6 | 33.7 | 34.2 | 34.3 | 34.8 | 35.2 | 36.0 | ||||
| Imports | 29.5 | 30.5 | 29.2 | 31.6 | 33.0 | 34.9 | 35.7 | 35.9 | 36.4 | 36.8 | 37.4 | ||||
| Net non-debt creating capital inflows (negative) | −2.4 | −1.5 | −1.8 | −1.7 | −1.0 | −1.4 | −1.4 | −1.5 | −1.6 | −1.6 | −1.6 | ||||
| Automatic debt dynamics 1/ | 0.1 | 0.5 | 5.9 | −1.9 | −0.9 | 0.7 | 0.6 | 0.5 | 0.6 | 0.7 | 0.8 | ||||
| Denominator: 1+g+r+gr | 1.1 | 1.1 | 0.8 | 1.2 | 1.1 | 1.0 | 1.0 | 1.1 | 1.1 | 1.1 | 1.1 | ||||
| Contribution from nominal interest rate | 1.6 | 1.5 | 1.4 | 1.3 | 1.5 | 1.6 | 1.5 | 1.4 | 1.5 | 1.5 | 1.7 | ||||
| Contribution from real GDP growth | −0.5 | −0.2 | 1.4 | −1.0 | −0.8 | −0.9 | −0.9 | −0.9 | −0.9 | −0.9 | −0.8 | ||||
| Contribution from price and exchange rate changes 2/ | −0.9 | −0.8 | 3.1 | −2.2 | −1.6 | … | … | … | … | … | … | ||||
| Residual, incl. change in gross foreign assets (2-3) 3/ | 3.8 | 0.7 | 0.1 | 6.4 | 3.0 | 4.5 | 1.9 | 1.2 | 1.0 | 0.9 | −0.1 | ||||
| External debt-to-exports ratio (in percent) | 68.1 | 66.5 | 79.8 | 78.9 | 77.0 | 81.4 | 82.1 | 81.5 | 79.5 | 77.0 | 71.4 | ||||
| Gross external financing need (in billions of US dollars) 4/ | 89.2 | 107.2 | 103.0 | 97.0 | 106.5 | 127.6 | 123.9 | 127.1 | 126.6 | 129.5 | 142.1 | ||||
| in percent of GDP | 8.6 | 9.8 | 11.7 | 9.4 | 9.2 | 11.0 | 10.3 | 10.0 | 9.5 | 9.2 | 9.5 | ||||
| Scenario with key variables at their historical averages 5/ | 27.4 | 27.6 | 27.4 | 27.1 | 26.7 | 25.3 | -1.3 | ||||||||
| Key Macroeconomic Assumptions Underlying Baseline | |||||||||||||||
| Real GDP growth (in percent) | 3.2 | 1.2 | −6.0 | 5.6 | 3.9 | 3.8 | 3.5 | 3.5 | 3.3 | 3.3 | 3.3 | ||||
| GDP deflator in US dollars (change in percent) | 5.4 | 4.5 | −14.2 | 11.1 | 7.2 | −3.0 | 0.5 | 1.8 | 1.8 | 2.1 | 2.1 | ||||
| Nominal external interest rate (in percent) | 9.5 | 8.2 | 6.0 | 7.2 | 7.1 | 6.7 | 5.9 | 5.4 | 5.5 | 5.8 | 6.5 | ||||
| Growth of exports (US dollar terms, in percent) 6/ | 8.8 | 6.9 | −20.9 | 28.3 | 16.3 | 7.2 | 5.7 | 5.6 | 6.5 | 6.8 | 7.8 | ||||
| Growth of imports (US dollar terms, in percent) 6/ | 9.7 | 9.1 | −22.7 | 26.9 | 16.4 | 6.7 | 6.2 | 6.0 | 6.7 | 6.5 | 7.3 | ||||
| Current account balance, excluding interest payments | 0.5 | −0.1 | 0.8 | 0.9 | 0.6 | 0.7 | 0.5 | 0.3 | 0.3 | 0.4 | 0.6 | ||||
| Net non-debt creating capital inflows | 2.4 | 1.5 | 1.8 | 1.7 | 1.0 | 1.4 | 1.4 | 1.5 | 1.6 | 1.6 | 1.6 | ||||
Derived as [r - g - ρ(1+g) + αε(1+r)]/(1+g+ρ+gρ) times previous period debt stock, with r = nominal effective interest rate on external debt; ρ = change in domestic GDP deflator in US dollar terms, g = real GDP growth rate, ε = nominal appreciation (increase in dollar value of domestic currency), and α = share of domestic-currency denominated debt in total external debt.
The contribution from price and exchange rate changes is defined as [-ρ(1+g)+ αε(1+r)]/(1+g+ρ+gρ) times previous period debt stock. ρ increases with an appreciating domestic currency (ε> 0) and rising inflation (based on GDP deflator).
For projection, line includes the impact of price and exchange rate changes.
Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.
Goods and non-factor services.
Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP) remain at their levels of the last projection year.
