Abstract
This 2016 Article IV Consultation highlights that the economy of the Marshall Islands is estimated to have expanded by about 0.5 percent in FY2015 (ending September 30), as the fishery sector recovered. Following a moderate inflation of 1.1 percent in FY2014, headline inflation dropped to -2.2 percent in FY2015 amid falling oil and utility prices. The fiscal balance is estimated to have recorded a surplus of about 3 percent of GDP in FY2014-15, owing to record-high fishing license fees. Growth is expected to rise to about 1.5 percent and inflation to about 0.5 percent in FY2016, as the effects of the drought in earlier 2016 are offset by the resumption of infrastructure projects.
Background
1. The RMI’s PPG debt is almost entirely external. According to the limited data available, the domestic component—held by domestic banks—is only 6 percent of the total. Private sector external debt is also estimated to be small, representing less than 2 percent of GDP.
2. PPG external debt has been on a downward trajectory since the early 2000s. It declined from 73.7 percent of GDP in FY2002 to 49.1 percent of GDP at end FY2015. About two-thirds is central government debt contracted with the Asian Development Bank (AsDB) on concessional terms, while the remainder is state-owned enterprise (SOE) debt guaranteed by the government.
3. The analysis is based on the standard DSA framework for low-income countries (LICs). The framework assesses the evolution of debt against the respective policy-dependent indicative thresholds to ascertain debt sustainability.1 RMI’s policies and institutions, as measured by the CPIA, averaged 2.7 over the past 3 years. Hence the country is classified as a “weak” performer and is assessed against relatively lower debt thresholds.
Underlying Assumptions
4. The economy is estimated to have returned to a positive growth in FY2015, led by the fishery sector, and is expected to expand further in FY2016. Following a contraction in FY2014, real GDP growth was estimated at 0.4 percent in FY2015 and is expected to rise to 1.4 percent in FY2016, as the effects of the drought earlier this year are offset by the resumption of Compact-funded infrastructure spending. The fiscal balance is estimated to have recorded a surplus of 3 percent of GDP in FY2014–15, due to record-high fishing license fees. It is projected to decline to a smaller surplus in FY2016 and, without reforms, to a deficit of 2 percent of GDP over the medium term due to the steady decline in Compact grants until FY2023. Potential GDP growth is projected to be 1-1.5 percent over the medium term, absent structural reforms. Box 1 summarizes the medium-term macroeconomic framework underlying this DSA update, which is also consistent with the outlook for the Compact Trust Fund (CTF) summarized in Box 2.
External DSA
5. Under the baseline scenario, RMI’s external PPG debt trajectory remains above the indicative threshold for a protracted period of time. The present value (PV) of external PPG debt is estimated at 40.0 percent of GDP in FY2015, 10 percentage points above the indicative threshold of 30 percent and is not anticipated to fall below that limit over the projection period. Debt accumulation is expected to remain positive at least until FY2036, reflecting government deficit financing. The grant element of new borrowing is expected to increase after FY2018, as the share of concessional loans from multilateral partners in the financing mix is projected to rise. The PV of external PPG debt-to-export ratio is currently above the indicative threshold of 100 percent, but is projected to fall below it in FY2017, thanks to the projected export expansion. The PV of external PPG debt-to-revenue ratio is currently below the indicative threshold of 200 percent, and expected to remain below it during the projection period. As most of external PPG debt is on concessional terms, the debt service to export and revenue ratios are expected to remain below the indicative thresholds over the long-term horizon.
6. Stress tests confirm the vulnerability of the debt position relative to GDP, exports, and revenues. In the most extreme shock scenario—with export value growth in FY2017–18 one standard deviation below the historical average—the PV of the debt-to-export ratio would remain above its relevant threshold at the end of the projection period. The debt service-to-exports ratio would also remain above its indicative threshold at least until FY2036. These highlight the sensitivity of the external debt position to exports, including in fishing, which historically had high volatility. Under a more benign scenario whereby key macroeconomic variables are assumed at their historical averages—characterized by positive primary balances—the PV of the debt-to-GDP, and debt-to-exports would fall below their indicative thresholds in FY2016.2
Public DSA
7. Total PPG debt follows very closely the dynamics of PPG external debt. The PV of PPG debt-to-GDP and to revenue ratios is projected to decline very slowly over the projection period. The debt dynamics is particularly sensitive to growth shocks. Under the most extreme shock, the PV of debt-to-GDP and debt-to-revenue would remain on an upward trend at least until FY2036. Under a shock to the primary balance, the debt service-to-revenue ratio would also keep growing throughout the projection period.
The Authorities Views
8. The authorities agreed with the DSA findings, noting that the current risk of debt distress is high. They saw the need for fiscal adjustment and improvements in public financial management. They emphasized that a Decrement Management Plan (DMP) was developed to implement a fiscal adjustment in the face of declining Compact grants. They also noted that the Public Financial Management Reform Roadmap (PFMRR) was adopted in August 2014. The Ministry of Finance is leading the effort in implementing its recommendations and targeted activities, including financial accountability, transparency and budget oversight, and aid coordination. However, these efforts continue to require consistent attention and action to realize the full benefit of the Reform Roadmap.
Conclusions
9. The standard DSA framework for LICs suggests that the RMI is at high risk of debt distress. The baseline scenario indicates that the PV of the external debt-to-GDP ratio would breach the indicative threshold throughout the entire projection period. Furthermore, stress tests suggest that RMI’s external PPG debt trajectory could remain above relevant thresholds for an even more protracted period of time. RMI’s vulnerability to debt distress is mitigated by a number of factors: most debt is on concessional terms and from development partners; the decline in external support from the Compact will be gradual, sheltering the country from the risk of a sudden stop in foreign financing; and the government is building up the CTF that will provide a stable source of funding after FY2023. On the other hand, vulnerabilities are exacerbated by the lack of fiscal buffers, uncertainty about prospective SOE losses, contingent liabilities from climatic events, the social security system, and uncertainty on prospective income returns from the CTF. Thus, the government needs to adhere to its existing consolidation plans to generate sufficient fiscal surpluses by FY2023 to shore up the Compact Trust Fund, while safeguarding social spending and economic growth.
Marshall Islands: Macroeconomic Assumptions
The key assumptions of the 2016 DSA are consistent with the macroeconomic framework outlined in the 2016 Article IV Report. Relative to the previous DSA, short-term indicators have improved somewhat mainly due to the upward revision of fiscal revenues, notably from fishing license fees, but the long-term dynamics remain broadly unchanged.
GDP growth is projected to rise from 0.4 percent in FY2015 to 1.3 percent over the medium term. The medium-term projections reflect the decline in Compact grants and limited private sector expansion.
The GDP deflator is expected to remain about 1 percentage point below CPI inflation growth, at around 1 percent.
A fiscal deficit of around 1–3 percent of GDP is projected in FY2020–36. The wage bill is assumed to remain constant as a percent of GDP beyond FY2020, while subsidies to SOEs are assumed to decline very moderately in real terms. On the revenue side, Compact grants in nominal terms are projected to decrease according to schedule, while grants from other donors are expected to remain stable at an annual average of about 12 percent of GDP. The tax revenues-to-GDP ratio is assumed to remain broadly unchanged at around 15 percent of GDP, as the baseline scenario does not incorporate any tax reforms. Fishing license fees are assumed to increase moderately. Beyond FY2023, expenditures are expected to follow trends in revenues and grants.
External financing: In the absence of access to the international capital market and a very limited domestic market, the financing gap is assumed to be financed by a combination of bilateral loans from development partners and multilateral concessional lending. The annual interest rate on bilateral loans is assumed at 3 percent, consistent with the rate currently charged to public entities by bilateral development partners. In the medium term, it is assumed that the RMI will also be eligible for IDA-like concessional lending.
The Compact Trust Fund (CTF) outlook is summarized in Box 2.
The current account deficit (including official transfers) is expected to gradually deteriorate from 1.6 percent of GDP in FY2015 to around 5 percent of GDP by FY2023 and remain at that level thereafter. The deficit is assumed to be financed by a combination of bilateral loans from development partners and multilateral concessional lending.
Brief Overview of the Compact Trust Fund Under the Baseline Scenario
The Compact Trust Fund (CTF) was established in FY2004 to contribute to the long-term budgetary self-reliance of the RMI after most of the recurrent Compact sector grants expire in FY2023. The CTF is administered by an independent committee formed by representatives from the RMI, United States, and Taiwan Province of China, and is managed by a professional investment advisor. The RMI’s contributions to the CTF have not been steady over the years and depend on the country’s fiscal position. Contributions have been mainly provided by the United States, followed by Taiwan Province of China. From FY2024 onwards, income returns from the CTF can be withdrawn to finance budget needs, under some limitations.
Under the baseline scenario, the CTF is assumed to yield an average annual nominal return of 5 percent, in line with the historical track record. Under this assumption, long-term self-sufficiency will not be secured because the real value of the CTF will decline over time, even though income flows in the years immediately after FY2023 are expected to be sufficient to cover the anticipated reduction in grants. Compact-related grants are expected to be reduced by US$27 million in FY2024, while CTF’s investment earnings are projected at US$36 million. As the gap between investment returns and grant reduction is expected to be too small to compensate for inflation, the real value of the fund is projected to start declining in FY2024. These projections are sensitive to the assumption on CTF annual investment returns, which have been quite volatile in the past.
Marshall Islands: Indicators of Public Guaranteed External Debt Under Alternative Scenarios FY2016–36 1/
Citation: IMF Staff Country Reports 2016, 260; 10.5089/9781475520521.002.A003
Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio on or before 2026. In figure b. it corresponds to a Terms shock; in c. to a Exports shock; in d. to a Exports shock; in e. to a Exports shock and in figure f. to a Growth shock2/ Revenues are defined exclusive of grants. Revenues increase in FY2024 due to annual distributions from the Compact Trust Fund (CTF) starting that year.Marshall Islands: Indicators of Public Debt Under Alternative Scenarios, FY2016–36
Citation: IMF Staff Country Reports 2016, 260; 10.5089/9781475520521.002.A003
Sources: Country authorities; and staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio on or before 2026.2/ Revenues are defined inclusive of grants.Marshall Islands: External Debt Sustainability Framework, Baseline Scenario, FY2013–36 1/
(In percent of GDP, unless otherwise indicated)
Includes both public and private sector external debt.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. This line item also reflects projected capital transfers for investment projects.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Marshall Islands: External Debt Sustainability Framework, Baseline Scenario, FY2013–36 1/
(In percent of GDP, unless otherwise indicated)
| Actual | Historical6/ Average | Standard 6/ Deviation | Projections | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016-2021 | 2022-2036 | ||||||||||||||||||
| 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Average | 2026 | 2036 | Average | |||||||
| External debt (nominal) 1/ | 53.7 | 53.1 | 51.1 | 47.6 | 43.6 | 39.7 | 39.3 | 39.3 | 40.0 | 47.2 | 63.6 | ||||||||
| of which: public and publicly guaranteed (PPG) | 51.8 | 51.1 | 49.1 | 45.6 | 41.7 | 37.8 | 37.5 | 37.5 | 38.3 | 45.6 | 62.4 | ||||||||
| Change in external debt | −0.6 | −0.6 | −2.0 | −3.6 | −3.9 | −3.9 | −0.4 | −0.1 | 0.7 | 1.4 | 1.5 | ||||||||
| Identified net debt-creating flows | 5.8 | 3.4 | 2.3 | 5.5 | 7.2 | 7.4 | 7.7 | 8.6 | 9.5 | 6.6 | 4.9 | ||||||||
| Non-interest current account deficit | 8.5 | 3.1 | 1.9 | 4.6 | 8.4 | 6.5 | 8.4 | 8.5 | 8.7 | 9.5 | 10.3 | 7.2 | 5.2 | 7.2 | |||||
| Deficit in balance of goods and services | 60.2 | 58.0 | 66.4 | 68.5 | 70.4 | 69.7 | 69.2 | 68.8 | 68.5 | 64.1 | 59.4 | ||||||||
| Exports | 43.6 | 39.6 | 35.7 | 35.2 | 35.5 | 35.9 | 36.3 | 36.5 | 36.8 | 37.8 | 37.9 | ||||||||
| Imports | 103.8 | 97.7 | 102.2 | 103.6 | 105.9 | 105.5 | 105.5 | 105.3 | 105.2 | 101.9 | 97.3 | ||||||||
| Net current transfers (negative = inflow) | −31.3 | −29.4 | −31.5 | −35.5 | 4.9 | −32.0 | −32.4 | −30.9 | −30.5 | −29.5 | −28.6 | −17.4 | −15.4 | −18.0 | |||||
| of which: official | −30.1 | −28.0 | −30.4 | −30.2 | −30.7 | −29.3 | −28.9 | −28.1 | −27.3 | −14.9 | −12.9 | ||||||||
| Other current account flows (negative = net inflow) | −20.3 | −25.6 | −33.0 | −30.0 | −29.6 | −30.2 | −30.1 | −29.8 | −29.6 | −39.5 | −38.8 | ||||||||
| Net FDI (negative = inflow) | −2.4 | −2.0 | −1.5 | −5.3 | 6.9 | −1.5 | −1.4 | −1.4 | −1.4 | −1.3 | −1.3 | −1.3 | −1.3 | −1.3 | |||||
| Endogenous debt dynamics 2/ | −0.3 | 2.3 | 1.9 | 0.5 | 0.2 | 0.3 | 0.4 | 0.4 | 0.5 | 0.7 | 0.9 | ||||||||
| Contribution from nominal interest rate | 1.4 | 1.3 | 1.3 | 1.2 | 1.1 | 1.0 | 1.0 | 1.0 | 1.0 | 1.2 | 1.7 | ||||||||
| Contribution from real GDP growth | −1.1 | 0.5 | −0.2 | −0.7 | −0.8 | −0.7 | −0.6 | −0.6 | −0.5 | −0.6 | −0.8 | ||||||||
| Contribution from price and exchange rate changes | −0.5 | 0.5 | 0.8 | … | … | … | … | … | … | … | … | ||||||||
| Residual (3-4) 3/ | −6.4 | −4.0 | −4.3 | −9.0 | −11.1 | −11.3 | −8.1 | −8.7 | −8.8 | −5.2 | −3.4 | ||||||||
| of which: exceptional financing | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||
| PV of external debt 4/ | … | … | 42.0 | 39.4 | 36.4 | 33.3 | 33.0 | 32.8 | 33.4 | 39.3 | 47.0 | ||||||||
| In percent of exports | … | … | 117.4 | 112.0 | 102.7 | 92.9 | 90.9 | 89.9 | 91.0 | 104.2 | 123.9 | ||||||||
| PV of PPG external debt | … | … | 40.0 | 37.4 | 34.5 | 31.5 | 31.1 | 31.1 | 31.7 | 37.8 | 45.8 | ||||||||
| In percent of exports | … | … | 111.8 | 106.4 | 97.2 | 87.7 | 85.9 | 85.1 | 86.3 | 100.2 | 120.8 | ||||||||
| In percent of government revenues (excluding grants) | … | … | 151.6 | 147.9 | 137.2 | 123.8 | 122.3 | 123.2 | 126.8 | 105.2 | 127.9 | ||||||||
| Debt service-to-exports ratio (in percent) | 7.6 | 9.1 | 10.9 | 10.8 | 10.7 | 10.3 | 11.0 | 10.4 | 9.3 | 8.8 | 5.7 | ||||||||
| PPG debt service-to-exports ratio (in percent) | 7.6 | 9.1 | 10.9 | 10.8 | 10.7 | 10.3 | 11.0 | 10.4 | 9.3 | 8.8 | 5.7 | ||||||||
| PPG debt service-to-revenue ratio (in percent) | 15.5 | 15.5 | 14.8 | 15.1 | 15.2 | 14.5 | 15.6 | 15.0 | 13.6 | 9.2 | 6.0 | ||||||||
| Total gross financing need (Millions of U.S. dollars) | 17.9 | 8.8 | 8.0 | 16.5 | 20.7 | 21.5 | 23.1 | 25.2 | 26.9 | 22.5 | 19.0 | ||||||||
| Non-interest current account deficit that stabilizes debt ratio | 9.1 | 3.7 | 4.0 | 10.0 | 12.3 | 12.5 | 9.0 | 9.5 | 9.5 | 5.8 | 3.8 | ||||||||
| Key macroeconomic assumptions | |||||||||||||||||||
| Real GDP growth (in percent) | 2.1 | −0.9 | 0.4 | 1.5 | 2.6 | 1.4 | 1.7 | 1.8 | 1.6 | 1.6 | 1.3 | 1.6 | 1.3 | 1.3 | 1.3 | ||||
| GDP deflator in US dollar terms (change in percent) | 1.0 | −0.9 | −1.5 | 1.5 | 1.8 | 0.5 | 0.8 | 1.3 | 1.3 | 1.5 | 1.5 | 1.1 | 1.1 | 1.1 | 1.1 | ||||
| Effective interest rate (percent) 5/ | 2.6 | 2.4 | 2.4 | 2.9 | 0.4 | 2.3 | 2.3 | 2.4 | 2.7 | 2.7 | 2.7 | 2.5 | 2.8 | 2.8 | 2.8 | ||||
| Growth of exports of G&S (US dollar terms, in percent) | −0.6 | −10.8 | −10.8 | 8.2 | 23.4 | 0.2 | 3.4 | 4.3 | 4.0 | 3.8 | 3.5 | 3.2 | 2.7 | 2.5 | 2.6 | ||||
| Growth of imports of G&S (US dollar terms, in percent) | 11.6 | −7.7 | 3.4 | 4.1 | 9.0 | 3.3 | 4.7 | 2.7 | 2.9 | 2.9 | 2.8 | 3.2 | 1.6 | 2.0 | 1.9 | ||||
| Grant element of new public sector borrowing (in percent) | … | … | … | … | … | … | … | … | 45.5 | 45.1 | 44.6 | 45.1 | 43.8 | 44.0 | 43.7 | ||||
| Government revenues (excluding grants, in percent of GDP) | 21.4 | 23.4 | 26.4 | 25.3 | 25.1 | 25.4 | 25.5 | 25.2 | 25.0 | 36.0 | 35.8 | 34.4 | |||||||
| Aid flows (in Millions of US dollars) 7/ | 66.2 | 53.9 | 56.5 | 70.0 | 76.6 | 76.6 | 84.2 | 84.6 | 85.5 | 54.8 | 57.9 | ||||||||
| of which: Grants | 61.3 | 53.9 | 56.5 | 70.0 | 76.6 | 76.6 | 76.5 | 76.5 | 76.4 | 43.7 | 47.4 | ||||||||
| of which: Concessional loans | 4.9 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 7.6 | 8.2 | 9.1 | 11.1 | 10.4 | ||||||||
| Grant-equivalent financing (in percent of GDP) 8/ | … | … | … | … | … | … | 39.9 | 38.8 | 37.8 | 20.5 | 17.2 | 21.7 | |||||||
| Grant-equivalent financing (in percent of external financing) 8/ | … | … | … | … | … | … | 93.1 | 92.7 | 92.2 | 85.9 | 87.3 | 86.8 | |||||||
| Memorandum items: | |||||||||||||||||||
| Nominal GDP (Millions of US dollars) | 190.2 | 186.7 | 184.6 | 188.0 | 192.8 | 198.6 | 204.5 | 210.8 | 216.7 | 244.3 | 310.5 | ||||||||
| Nominal dollar GDP growth | 3.2 | −1.8 | −1.1 | 1.8 | 2.5 | 3.0 | 3.0 | 3.1 | 2.8 | 2.7 | 2.4 | 2.4 | 2.4 | ||||||
| PV of PPG external debt (in Millions of US dollars) | 73.8 | 70.3 | 66.5 | 62.5 | 63.7 | 65.5 | 68.8 | 92.4 | 142.2 | ||||||||||
| (PVt-PVt-1)/GDPt-1 (in percent) | −1.9 | −2.0 | −2.1 | 0.6 | 0.9 | 1.5 | −0.5 | 2.1 | 1.4 | 1.9 | |||||||||
| Gross workers’ remittances (Millions of US dollars) | 7.4 | 7.7 | 8.3 | 8.4 | 8.7 | 8.9 | 9.2 | 9.5 | 9.7 | 11.0 | 14.0 | ||||||||
| PV of PPG external debt (in percent of GDP + remittances) | … | … | 38.3 | 35.8 | 33.0 | 30.1 | 29.8 | 29.8 | 30.4 | 36.2 | 43.8 | ||||||||
| PV of PPG external debt (in percent of exports + remittances) | … | … | 99.3 | 94.3 | 86.3 | 77.9 | 76.4 | 75.8 | 76.9 | 89.5 | 108.0 | ||||||||
| Debt service of PPG external debt (in percent of exports + remittances) | … | … | 9.7 | 9.6 | 9.5 | 9.1 | 9.8 | 9.2 | 8.3 | 7.8 | 5.1 | ||||||||
Includes both public and private sector external debt.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. This line item also reflects projected capital transfers for investment projects.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Marshall Islands: External Debt Sustainability Framework, Baseline Scenario, FY2013–36 1/
(In percent of GDP, unless otherwise indicated)
| Actual | Historical6/ Average | Standard 6/ Deviation | Projections | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016-2021 | 2022-2036 | ||||||||||||||||||
| 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Average | 2026 | 2036 | Average | |||||||
| External debt (nominal) 1/ | 53.7 | 53.1 | 51.1 | 47.6 | 43.6 | 39.7 | 39.3 | 39.3 | 40.0 | 47.2 | 63.6 | ||||||||
| of which: public and publicly guaranteed (PPG) | 51.8 | 51.1 | 49.1 | 45.6 | 41.7 | 37.8 | 37.5 | 37.5 | 38.3 | 45.6 | 62.4 | ||||||||
| Change in external debt | −0.6 | −0.6 | −2.0 | −3.6 | −3.9 | −3.9 | −0.4 | −0.1 | 0.7 | 1.4 | 1.5 | ||||||||
| Identified net debt-creating flows | 5.8 | 3.4 | 2.3 | 5.5 | 7.2 | 7.4 | 7.7 | 8.6 | 9.5 | 6.6 | 4.9 | ||||||||
| Non-interest current account deficit | 8.5 | 3.1 | 1.9 | 4.6 | 8.4 | 6.5 | 8.4 | 8.5 | 8.7 | 9.5 | 10.3 | 7.2 | 5.2 | 7.2 | |||||
| Deficit in balance of goods and services | 60.2 | 58.0 | 66.4 | 68.5 | 70.4 | 69.7 | 69.2 | 68.8 | 68.5 | 64.1 | 59.4 | ||||||||
| Exports | 43.6 | 39.6 | 35.7 | 35.2 | 35.5 | 35.9 | 36.3 | 36.5 | 36.8 | 37.8 | 37.9 | ||||||||
| Imports | 103.8 | 97.7 | 102.2 | 103.6 | 105.9 | 105.5 | 105.5 | 105.3 | 105.2 | 101.9 | 97.3 | ||||||||
| Net current transfers (negative = inflow) | −31.3 | −29.4 | −31.5 | −35.5 | 4.9 | −32.0 | −32.4 | −30.9 | −30.5 | −29.5 | −28.6 | −17.4 | −15.4 | −18.0 | |||||
| of which: official | −30.1 | −28.0 | −30.4 | −30.2 | −30.7 | −29.3 | −28.9 | −28.1 | −27.3 | −14.9 | −12.9 | ||||||||
| Other current account flows (negative = net inflow) | −20.3 | −25.6 | −33.0 | −30.0 | −29.6 | −30.2 | −30.1 | −29.8 | −29.6 | −39.5 | −38.8 | ||||||||
| Net FDI (negative = inflow) | −2.4 | −2.0 | −1.5 | −5.3 | 6.9 | −1.5 | −1.4 | −1.4 | −1.4 | −1.3 | −1.3 | −1.3 | −1.3 | −1.3 | |||||
| Endogenous debt dynamics 2/ | −0.3 | 2.3 | 1.9 | 0.5 | 0.2 | 0.3 | 0.4 | 0.4 | 0.5 | 0.7 | 0.9 | ||||||||
| Contribution from nominal interest rate | 1.4 | 1.3 | 1.3 | 1.2 | 1.1 | 1.0 | 1.0 | 1.0 | 1.0 | 1.2 | 1.7 | ||||||||
| Contribution from real GDP growth | −1.1 | 0.5 | −0.2 | −0.7 | −0.8 | −0.7 | −0.6 | −0.6 | −0.5 | −0.6 | −0.8 | ||||||||
| Contribution from price and exchange rate changes | −0.5 | 0.5 | 0.8 | … | … | … | … | … | … | … | … | ||||||||
| Residual (3-4) 3/ | −6.4 | −4.0 | −4.3 | −9.0 | −11.1 | −11.3 | −8.1 | −8.7 | −8.8 | −5.2 | −3.4 | ||||||||
| of which: exceptional financing | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||
| PV of external debt 4/ | … | … | 42.0 | 39.4 | 36.4 | 33.3 | 33.0 | 32.8 | 33.4 | 39.3 | 47.0 | ||||||||
| In percent of exports | … | … | 117.4 | 112.0 | 102.7 | 92.9 | 90.9 | 89.9 | 91.0 | 104.2 | 123.9 | ||||||||
| PV of PPG external debt | … | … | 40.0 | 37.4 | 34.5 | 31.5 | 31.1 | 31.1 | 31.7 | 37.8 | 45.8 | ||||||||
| In percent of exports | … | … | 111.8 | 106.4 | 97.2 | 87.7 | 85.9 | 85.1 | 86.3 | 100.2 | 120.8 | ||||||||
| In percent of government revenues (excluding grants) | … | … | 151.6 | 147.9 | 137.2 | 123.8 | 122.3 | 123.2 | 126.8 | 105.2 | 127.9 | ||||||||
| Debt service-to-exports ratio (in percent) | 7.6 | 9.1 | 10.9 | 10.8 | 10.7 | 10.3 | 11.0 | 10.4 | 9.3 | 8.8 | 5.7 | ||||||||
| PPG debt service-to-exports ratio (in percent) | 7.6 | 9.1 | 10.9 | 10.8 | 10.7 | 10.3 | 11.0 | 10.4 | 9.3 | 8.8 | 5.7 | ||||||||
| PPG debt service-to-revenue ratio (in percent) | 15.5 | 15.5 | 14.8 | 15.1 | 15.2 | 14.5 | 15.6 | 15.0 | 13.6 | 9.2 | 6.0 | ||||||||
| Total gross financing need (Millions of U.S. dollars) | 17.9 | 8.8 | 8.0 | 16.5 | 20.7 | 21.5 | 23.1 | 25.2 | 26.9 | 22.5 | 19.0 | ||||||||
| Non-interest current account deficit that stabilizes debt ratio | 9.1 | 3.7 | 4.0 | 10.0 | 12.3 | 12.5 | 9.0 | 9.5 | 9.5 | 5.8 | 3.8 | ||||||||
| Key macroeconomic assumptions | |||||||||||||||||||
| Real GDP growth (in percent) | 2.1 | −0.9 | 0.4 | 1.5 | 2.6 | 1.4 | 1.7 | 1.8 | 1.6 | 1.6 | 1.3 | 1.6 | 1.3 | 1.3 | 1.3 | ||||
| GDP deflator in US dollar terms (change in percent) | 1.0 | −0.9 | −1.5 | 1.5 | 1.8 | 0.5 | 0.8 | 1.3 | 1.3 | 1.5 | 1.5 | 1.1 | 1.1 | 1.1 | 1.1 | ||||
| Effective interest rate (percent) 5/ | 2.6 | 2.4 | 2.4 | 2.9 | 0.4 | 2.3 | 2.3 | 2.4 | 2.7 | 2.7 | 2.7 | 2.5 | 2.8 | 2.8 | 2.8 | ||||
| Growth of exports of G&S (US dollar terms, in percent) | −0.6 | −10.8 | −10.8 | 8.2 | 23.4 | 0.2 | 3.4 | 4.3 | 4.0 | 3.8 | 3.5 | 3.2 | 2.7 | 2.5 | 2.6 | ||||
| Growth of imports of G&S (US dollar terms, in percent) | 11.6 | −7.7 | 3.4 | 4.1 | 9.0 | 3.3 | 4.7 | 2.7 | 2.9 | 2.9 | 2.8 | 3.2 | 1.6 | 2.0 | 1.9 | ||||
| Grant element of new public sector borrowing (in percent) | … | … | … | … | … | … | … | … | 45.5 | 45.1 | 44.6 | 45.1 | 43.8 | 44.0 | 43.7 | ||||
| Government revenues (excluding grants, in percent of GDP) | 21.4 | 23.4 | 26.4 | 25.3 | 25.1 | 25.4 | 25.5 | 25.2 | 25.0 | 36.0 | 35.8 | 34.4 | |||||||
| Aid flows (in Millions of US dollars) 7/ | 66.2 | 53.9 | 56.5 | 70.0 | 76.6 | 76.6 | 84.2 | 84.6 | 85.5 | 54.8 | 57.9 | ||||||||
| of which: Grants | 61.3 | 53.9 | 56.5 | 70.0 | 76.6 | 76.6 | 76.5 | 76.5 | 76.4 | 43.7 | 47.4 | ||||||||
| of which: Concessional loans | 4.9 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 7.6 | 8.2 | 9.1 | 11.1 | 10.4 | ||||||||
| Grant-equivalent financing (in percent of GDP) 8/ | … | … | … | … | … | … | 39.9 | 38.8 | 37.8 | 20.5 | 17.2 | 21.7 | |||||||
| Grant-equivalent financing (in percent of external financing) 8/ | … | … | … | … | … | … | 93.1 | 92.7 | 92.2 | 85.9 | 87.3 | 86.8 | |||||||
| Memorandum items: | |||||||||||||||||||
| Nominal GDP (Millions of US dollars) | 190.2 | 186.7 | 184.6 | 188.0 | 192.8 | 198.6 | 204.5 | 210.8 | 216.7 | 244.3 | 310.5 | ||||||||
| Nominal dollar GDP growth | 3.2 | −1.8 | −1.1 | 1.8 | 2.5 | 3.0 | 3.0 | 3.1 | 2.8 | 2.7 | 2.4 | 2.4 | 2.4 | ||||||
| PV of PPG external debt (in Millions of US dollars) | 73.8 | 70.3 | 66.5 | 62.5 | 63.7 | 65.5 | 68.8 | 92.4 | 142.2 | ||||||||||
| (PVt-PVt-1)/GDPt-1 (in percent) | −1.9 | −2.0 | −2.1 | 0.6 | 0.9 | 1.5 | −0.5 | 2.1 | 1.4 | 1.9 | |||||||||
| Gross workers’ remittances (Millions of US dollars) | 7.4 | 7.7 | 8.3 | 8.4 | 8.7 | 8.9 | 9.2 | 9.5 | 9.7 | 11.0 | 14.0 | ||||||||
| PV of PPG external debt (in percent of GDP + remittances) | … | … | 38.3 | 35.8 | 33.0 | 30.1 | 29.8 | 29.8 | 30.4 | 36.2 | 43.8 | ||||||||
| PV of PPG external debt (in percent of exports + remittances) | … | … | 99.3 | 94.3 | 86.3 | 77.9 | 76.4 | 75.8 | 76.9 | 89.5 | 108.0 | ||||||||
| Debt service of PPG external debt (in percent of exports + remittances) | … | … | 9.7 | 9.6 | 9.5 | 9.1 | 9.8 | 9.2 | 8.3 | 7.8 | 5.1 | ||||||||
Includes both public and private sector external debt.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. This line item also reflects projected capital transfers for investment projects.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Marshall Islands: Sensitivity Analysis for Key Indicators of PPG External Debt, FY2016–36
(In percent)
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Marshall Islands: Sensitivity Analysis for Key Indicators of PPG External Debt, FY2016–36
(In percent)
| Projections | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2026 | 2036 | ||
| PV of debt-to GDP ratio | |||||||||
| Baseline | 37 | 34 | 31 | 31 | 31 | 32 | 38 | 46 | |
| A. Alternative Scenarios | |||||||||
| A1. Key variables at their historical averages in 2016-2036 1/ | 37 | 30 | 22 | 17 | 11 | 6 | −15 | −17 | |
| A2. New public sector loans on less favorable terms in 2016-2036 2 | 37 | 34 | 31 | 32 | 34 | 36 | 50 | 72 | |
| B. Bound Tests | |||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2017-2018 | 37 | 35 | 33 | 33 | 33 | 34 | 40 | 49 | |
| B2. Export value growth at historical average minus one standard deviation in 2017-2018 3/ | 37 | 38 | 43 | 42 | 42 | 43 | 48 | 49 | |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2017-2018 | 37 | 35 | 32 | 32 | 32 | 33 | 39 | 47 | |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2017-2018 4/ | 37 | 37 | 36 | 36 | 36 | 37 | 42 | 47 | |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 37 | 36 | 36 | 36 | 36 | 37 | 42 | 49 | |
| PV of debt-to-exports ratio | |||||||||
| Baseline | 106 | 97 | 88 | 86 | 85 | 86 | 100 | 121 | |
| A. Alternative Scenarios | |||||||||
| A1. Key variables at their historical averages in 2016-2036 1/ | 106 | 84 | 61 | 46 | 30 | 15 | −40 | −44 | |
| A2. New public sector loans on less favorable terms in 2016-2036 2 | 106 | 97 | 88 | 90 | 93 | 98 | 132 | 190 | |
| B. Bound Tests | |||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2017-2018 | 106 | 97 | 88 | 86 | 85 | 86 | 100 | 121 | |
| B2. Export value growth at historical average minus one standard deviation in 2017-2018 3/ | 106 | 132 | 177 | 175 | 174 | 176 | 189 | 195 | |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2017-2018 | 106 | 97 | 88 | 86 | 85 | 86 | 100 | 121 | |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2017-2018 4/ | 106 | 106 | 102 | 100 | 99 | 101 | 112 | 125 | |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 106 | 108 | 112 | 110 | 109 | 111 | 125 | 143 | |
| PV of debt-to-revenue ratio | |||||||||
| Baseline | 148 | 137 | 124 | 122 | 123 | 127 | 105 | 128 | |
| A. Alternative Scenarios | |||||||||
| A1. Key variables at their historical averages in 2016-2036 1/ | 148 | 118 | 86 | 65 | 44 | 22 | −42 | −47 | |
| A2. New public sector loans on less favorable terms in 2016-2036 2 | 148 | 137 | 124 | 128 | 134 | 143 | 139 | 202 | |
| B. Bound Tests | |||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2017-2018 | 148 | 141 | 131 | 130 | 131 | 134 | 111 | 135 | |
| B2. Export value growth at historical average minus one standard deviation in 2017-2018 3/ | 148 | 153 | 167 | 166 | 168 | 173 | 133 | 138 | |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2017-2018 | 148 | 139 | 127 | 126 | 127 | 130 | 108 | 131 | |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2017-2018 4/ | 148 | 149 | 143 | 142 | 144 | 148 | 117 | 132 | |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 148 | 144 | 143 | 141 | 143 | 147 | 118 | 136 | |
| Debt service-to-exports ratio | |||||||||
| Baseline | 11 | 11 | 10 | 11 | 10 | 9 | 9 | 6 | |
| A. Alternative Scenarios | |||||||||
| A1. Key variables at their historical averages in 2016-2036 1/ | 11 | 11 | 10 | 10 | 9 | 8 | 2 | −6 | |
| A2. New public sector loans on less favorable terms in 2016-2036 2/ | 11 | 11 | 10 | 11 | 10 | 9 | 10 | 15 | |
| B. Bound Tests | |||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2017-2018 | 11 | 11 | 10 | 11 | 10 | 9 | 8 | 9 | |
| B2. Export value growth at historical average minus one standard deviation in 2017-2018 3/ | 11 | 13 | 16 | 17 | 16 | 14 | 16 | 16 | |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2017-2018 | 11 | 11 | 10 | 11 | 10 | 9 | 8 | 9 | |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2017-2018 4/ | 11 | 11 | 10 | 11 | 10 | 9 | 9 | 10 | |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 11 | 12 | 12 | 13 | 12 | 10 | 10 | 11 | |
| Debt service-to-revenue ratio | |||||||||
| Baseline | 15 | 15 | 14 | 16 | 15 | 14 | 9 | 6 | |
| A. Alternative Scenarios | |||||||||
| A1. Key variables at their historical averages in 2016-2036 1/ | 15 | 15 | 14 | 15 | 14 | 12 | 2 | −6 | |
| A2. New public sector loans on less favorable terms in 2016-2036 2/ | 15 | 15 | 14 | 15 | 15 | 14 | 11 | 16 | |
| B. Bound Tests | |||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2017-2018 | 15 | 16 | 15 | 16 | 15 | 14 | 9 | 10 | |
| B2. Export value growth at historical average minus one standard deviation in 2017-2018 3/ | 15 | 15 | 15 | 16 | 15 | 14 | 11 | 11 | |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2017-2018 | 15 | 15 | 15 | 16 | 15 | 13 | 9 | 10 | |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2017-2018 4/ | 15 | 15 | 15 | 16 | 15 | 13 | 10 | 10 | |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 15 | 15 | 15 | 16 | 15 | 14 | 10 | 10 | |
| Memorandum item: | |||||||||
| Grant element assumed on residual financing (i.e., financing required above baseline) 5/ | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 | |
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Marshall Islands: Sensitivity Analysis for Key Indicators of PPG External Debt, FY2016–36
(In percent)
| Projections | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2026 | 2036 | ||
| PV of debt-to GDP ratio | |||||||||
| Baseline | 37 | 34 | 31 | 31 | 31 | 32 | 38 | 46 | |
| A. Alternative Scenarios | |||||||||
| A1. Key variables at their historical averages in 2016-2036 1/ | 37 | 30 | 22 | 17 | 11 | 6 | −15 | −17 | |
| A2. New public sector loans on less favorable terms in 2016-2036 2 | 37 | 34 | 31 | 32 | 34 | 36 | 50 | 72 | |
| B. Bound Tests | |||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2017-2018 | 37 | 35 | 33 | 33 | 33 | 34 | 40 | 49 | |
| B2. Export value growth at historical average minus one standard deviation in 2017-2018 3/ | 37 | 38 | 43 | 42 | 42 | 43 | 48 | 49 | |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2017-2018 | 37 | 35 | 32 | 32 | 32 | 33 | 39 | 47 | |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2017-2018 4/ | 37 | 37 | 36 | 36 | 36 | 37 | 42 | 47 | |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 37 | 36 | 36 | 36 | 36 | 37 | 42 | 49 | |
| PV of debt-to-exports ratio | |||||||||
| Baseline | 106 | 97 | 88 | 86 | 85 | 86 | 100 | 121 | |
| A. Alternative Scenarios | |||||||||
| A1. Key variables at their historical averages in 2016-2036 1/ | 106 | 84 | 61 | 46 | 30 | 15 | −40 | −44 | |
| A2. New public sector loans on less favorable terms in 2016-2036 2 | 106 | 97 | 88 | 90 | 93 | 98 | 132 | 190 | |
| B. Bound Tests | |||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2017-2018 | 106 | 97 | 88 | 86 | 85 | 86 | 100 | 121 | |
| B2. Export value growth at historical average minus one standard deviation in 2017-2018 3/ | 106 | 132 | 177 | 175 | 174 | 176 | 189 | 195 | |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2017-2018 | 106 | 97 | 88 | 86 | 85 | 86 | 100 | 121 | |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2017-2018 4/ | 106 | 106 | 102 | 100 | 99 | 101 | 112 | 125 | |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 106 | 108 | 112 | 110 | 109 | 111 | 125 | 143 | |
| PV of debt-to-revenue ratio | |||||||||
| Baseline | 148 | 137 | 124 | 122 | 123 | 127 | 105 | 128 | |
| A. Alternative Scenarios | |||||||||
| A1. Key variables at their historical averages in 2016-2036 1/ | 148 | 118 | 86 | 65 | 44 | 22 | −42 | −47 | |
| A2. New public sector loans on less favorable terms in 2016-2036 2 | 148 | 137 | 124 | 128 | 134 | 143 | 139 | 202 | |
| B. Bound Tests | |||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2017-2018 | 148 | 141 | 131 | 130 | 131 | 134 | 111 | 135 | |
| B2. Export value growth at historical average minus one standard deviation in 2017-2018 3/ | 148 | 153 | 167 | 166 | 168 | 173 | 133 | 138 | |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2017-2018 | 148 | 139 | 127 | 126 | 127 | 130 | 108 | 131 | |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2017-2018 4/ | 148 | 149 | 143 | 142 | 144 | 148 | 117 | 132 | |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 148 | 144 | 143 | 141 | 143 | 147 | 118 | 136 | |
| Debt service-to-exports ratio | |||||||||
| Baseline | 11 | 11 | 10 | 11 | 10 | 9 | 9 | 6 | |
| A. Alternative Scenarios | |||||||||
| A1. Key variables at their historical averages in 2016-2036 1/ | 11 | 11 | 10 | 10 | 9 | 8 | 2 | −6 | |
| A2. New public sector loans on less favorable terms in 2016-2036 2/ | 11 | 11 | 10 | 11 | 10 | 9 | 10 | 15 | |
| B. Bound Tests | |||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2017-2018 | 11 | 11 | 10 | 11 | 10 | 9 | 8 | 9 | |
| B2. Export value growth at historical average minus one standard deviation in 2017-2018 3/ | 11 | 13 | 16 | 17 | 16 | 14 | 16 | 16 | |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2017-2018 | 11 | 11 | 10 | 11 | 10 | 9 | 8 | 9 | |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2017-2018 4/ | 11 | 11 | 10 | 11 | 10 | 9 | 9 | 10 | |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 11 | 12 | 12 | 13 | 12 | 10 | 10 | 11 | |
| Debt service-to-revenue ratio | |||||||||
| Baseline | 15 | 15 | 14 | 16 | 15 | 14 | 9 | 6 | |
| A. Alternative Scenarios | |||||||||
| A1. Key variables at their historical averages in 2016-2036 1/ | 15 | 15 | 14 | 15 | 14 | 12 | 2 | −6 | |
| A2. New public sector loans on less favorable terms in 2016-2036 2/ | 15 | 15 | 14 | 15 | 15 | 14 | 11 | 16 | |
| B. Bound Tests | |||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2017-2018 | 15 | 16 | 15 | 16 | 15 | 14 | 9 | 10 | |
| B2. Export value growth at historical average minus one standard deviation in 2017-2018 3/ | 15 | 15 | 15 | 16 | 15 | 14 | 11 | 11 | |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2017-2018 | 15 | 15 | 15 | 16 | 15 | 13 | 9 | 10 | |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2017-2018 4/ | 15 | 15 | 15 | 16 | 15 | 13 | 10 | 10 | |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 15 | 15 | 15 | 16 | 15 | 14 | 10 | 10 | |
| Memorandum item: | |||||||||
| Grant element assumed on residual financing (i.e., financing required above baseline) 5/ | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 | |
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Marshall Islands: Public Sector Debt Sustainability Framework, Baseline Scenario, FY2013–36
(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.]
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Marshall Islands: Public Sector Debt Sustainability Framework, Baseline Scenario, FY2013–36
(In percent of GDP, unless otherwise indicated)
| Actual | Estimate | Projections | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2013 | 2014 | 2015 | Average 5/ | Standard Deviation 5/ | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2016-21 Average | 2026 | 2036 | 2022-36 Average | ||||
| Public sector debt 1/ | 55.2 | 54.6 | 52.6 | 49.0 | 45.1 | 41.1 | 40.7 | 40.6 | 41.3 | 48.3 | 64.5 | |||||||
| of which: foreign-currency denominated | 55.2 | 54.6 | 52.6 | 49.0 | 45.1 | 41.1 | 40.7 | 40.6 | 41.3 | 48.3 | 64.5 | |||||||
| Change in public sector debt | 0.8 | −0.6 | −2.0 | −3.6 | −4.0 | −4.0 | −0.4 | −0.1 | 0.7 | 1.4 | 1.4 | |||||||
| Identified debt-creating flows | −1.4 | −2.2 | −2.1 | −2.3 | −1.5 | −1.0 | −0.6 | −0.3 | 0.1 | 1.2 | 1.5 | |||||||
| Primary deficit | −1.1 | −4.5 | −4.0 | −3.4 | 1.7 | −2.5 | −1.3 | −0.7 | −0.5 | −0.1 | 0.2 | −0.8 | 1.1 | 1.3 | 1.1 | |||
| Revenue and grants | 53.7 | 52.2 | 57.0 | 62.5 | 64.9 | 64.0 | 62.9 | 61.5 | 60.3 | 53.8 | 51.1 | |||||||
| of which: grants | 32.2 | 28.8 | 30.6 | 37.2 | 39.8 | 38.6 | 37.4 | 36.3 | 35.3 | 17.9 | 15.3 | |||||||
| Primary (noninterest) expenditure | 52.6 | 47.7 | 52.9 | 60.0 | 63.6 | 63.3 | 62.4 | 61.4 | 60.5 | 54.9 | 52.4 | |||||||
| Automatic debt dynamics | −0.3 | 2.3 | 1.9 | 0.2 | −0.2 | −0.3 | −0.2 | −0.2 | −0.1 | 0.1 | 0.2 | |||||||
| Contribution from interest rate/growth differential | −0.3 | 2.3 | 1.9 | 0.2 | −0.2 | −0.3 | −0.2 | −0.2 | −0.1 | 0.1 | 0.2 | |||||||
| of which: contribution from average real interest rate | 0.8 | 1.8 | 2.1 | 0.9 | 0.7 | 0.5 | 0.5 | 0.4 | 0.5 | 0.7 | 1.0 | |||||||
| of which: contribution from real GDP growth | −1.1 | 0.5 | −0.2 | −0.7 | −0.8 | −0.8 | −0.6 | −0.6 | −0.5 | −0.6 | −0.8 | |||||||
| Contribution from real exchange rate depreciation | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | … | … | |||||||
| Other identified debt-creating flows | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| 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 | |||||||
| Debt relief (HIPC and other) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Other (specify, e.g. bank recapitalization) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Residual, including asset changes | 2.2 | 1.6 | 0.1 | −1.3 | −2.5 | −3.0 | 0.2 | 0.2 | 0.6 | 0.1 | −0.1 | |||||||
| Other Sustainability Indicators | ||||||||||||||||||
| PV of public sector debt | … | … | 43.5 | 40.9 | 37.9 | 34.7 | 34.3 | 34.2 | 34.7 | 40.5 | 47.9 | |||||||
| of which: foreign-currency denominated | … | … | 43.5 | 40.9 | 37.9 | 34.7 | 34.3 | 34.2 | 34.7 | 40.5 | 47.9 | |||||||
| of which: external | … | … | 40.0 | 37.4 | 34.5 | 31.5 | 31.1 | 31.1 | 31.7 | 37.8 | 45.8 | |||||||
| PV of contingent liabilities (not included in public sector debt) | … | … | … | … | … | … | … | … | … | … | … | |||||||
| Gross financing need 2/ | 4.0 | 2.6 | 3.4 | 4.7 | 5.9 | 6.3 | 6.7 | 6.7 | 6.6 | 7.1 | 5.5 | |||||||
| PV of public sector debt-to-revenue and grants ratio (in percent) | … | … | 76.4 | 65.4 | 58.4 | 54.3 | 54.6 | 55.6 | 57.6 | 75.2 | 93.8 | |||||||
| PV of public sector debt-to-revenue ratio (in percent) | … | … | 165.0 | 161.6 | 150.7 | 136.6 | 134.8 | 135.4 | 138.7 | 112.6 | 133.8 | |||||||
| of which: external 3/ | … | … | 151.6 | 147.9 | 137.2 | 123.8 | 122.3 | 123.2 | 126.8 | 105.2 | 127.9 | |||||||
| Debt service-to-revenue and grants ratio (in percent) 4/ | 6.2 | 6.9 | 6.8 | 6.1 | 5.9 | 5.8 | 6.3 | 6.2 | 5.7 | 6.1 | 4.2 | |||||||
| Debt service-to-revenue ratio (in percent) 4/ | 15.5 | 15.5 | 14.8 | 15.1 | 15.2 | 14.5 | 15.6 | 15.0 | 13.6 | 9.2 | 6.0 | |||||||
| Primary deficit that stabilizes the debt-to-GDP ratio | −1.9 | −3.9 | −2.0 | 1.1 | 2.7 | 3.3 | −0.1 | 0.0 | −0.5 | −0.3 | −0.1 | |||||||
| Key macroeconomic and fiscal assumptions | ||||||||||||||||||
| Real GDP growth (in percent) | 2.1 | −0.9 | 0.4 | 1.5 | 2.6 | 1.4 | 1.7 | 1.8 | 1.6 | 1.6 | 1.3 | 1.6 | 1.3 | 1.3 | 1.3 | |||
| Average nominal interest rate on forex debt (in percent) | 2.6 | 2.4 | 2.3 | 2.9 | 0.5 | 2.3 | 2.2 | 2.4 | 2.6 | 2.6 | 2.6 | 2.4 | 2.7 | 2.8 | 2.7 | |||
| Average real interest rate on domestic debt (in percent) | … | … | … | … | … | … | … | … | … | … | … | … | … | … | … | |||
| Real exchange rate depreciation (in percent, + indicates depreciation) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | … | … | … | … | … | … | … | … | … | |||
| Inflation rate (GDP deflator, in percent) | 1.0 | −0.9 | −1.5 | 1.5 | 1.8 | 0.5 | 0.8 | 1.3 | 1.3 | 1.5 | 1.5 | 1.1 | 1.1 | 1.1 | 1.1 | |||
| Growth of real primary spending (deflated by GDP deflator, in percent) | 5.8 | −10.0 | 11.4 | 0.7 | 5.4 | 14.9 | 7.8 | 1.3 | 0.1 | −0.1 | −0.1 | 4.0 | 0.2 | 0.9 | 0.3 | |||
| Grant element of new external borrowing (in percent) | … | … | … | … | … | … | … | … | 45.5 | 45.1 | 44.6 | 45.1 | 43.8 | 44.0 | … | |||
[Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.]
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Marshall Islands: Public Sector Debt Sustainability Framework, Baseline Scenario, FY2013–36
(In percent of GDP, unless otherwise indicated)
| Actual | Estimate | Projections | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2013 | 2014 | 2015 | Average 5/ | Standard Deviation 5/ | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2016-21 Average | 2026 | 2036 | 2022-36 Average | ||||
| Public sector debt 1/ | 55.2 | 54.6 | 52.6 | 49.0 | 45.1 | 41.1 | 40.7 | 40.6 | 41.3 | 48.3 | 64.5 | |||||||
| of which: foreign-currency denominated | 55.2 | 54.6 | 52.6 | 49.0 | 45.1 | 41.1 | 40.7 | 40.6 | 41.3 | 48.3 | 64.5 | |||||||
| Change in public sector debt | 0.8 | −0.6 | −2.0 | −3.6 | −4.0 | −4.0 | −0.4 | −0.1 | 0.7 | 1.4 | 1.4 | |||||||
| Identified debt-creating flows | −1.4 | −2.2 | −2.1 | −2.3 | −1.5 | −1.0 | −0.6 | −0.3 | 0.1 | 1.2 | 1.5 | |||||||
| Primary deficit | −1.1 | −4.5 | −4.0 | −3.4 | 1.7 | −2.5 | −1.3 | −0.7 | −0.5 | −0.1 | 0.2 | −0.8 | 1.1 | 1.3 | 1.1 | |||
| Revenue and grants | 53.7 | 52.2 | 57.0 | 62.5 | 64.9 | 64.0 | 62.9 | 61.5 | 60.3 | 53.8 | 51.1 | |||||||
| of which: grants | 32.2 | 28.8 | 30.6 | 37.2 | 39.8 | 38.6 | 37.4 | 36.3 | 35.3 | 17.9 | 15.3 | |||||||
| Primary (noninterest) expenditure | 52.6 | 47.7 | 52.9 | 60.0 | 63.6 | 63.3 | 62.4 | 61.4 | 60.5 | 54.9 | 52.4 | |||||||
| Automatic debt dynamics | −0.3 | 2.3 | 1.9 | 0.2 | −0.2 | −0.3 | −0.2 | −0.2 | −0.1 | 0.1 | 0.2 | |||||||
| Contribution from interest rate/growth differential | −0.3 | 2.3 | 1.9 | 0.2 | −0.2 | −0.3 | −0.2 | −0.2 | −0.1 | 0.1 | 0.2 | |||||||
| of which: contribution from average real interest rate | 0.8 | 1.8 | 2.1 | 0.9 | 0.7 | 0.5 | 0.5 | 0.4 | 0.5 | 0.7 | 1.0 | |||||||
| of which: contribution from real GDP growth | −1.1 | 0.5 | −0.2 | −0.7 | −0.8 | −0.8 | −0.6 | −0.6 | −0.5 | −0.6 | −0.8 | |||||||
| Contribution from real exchange rate depreciation | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | … | … | |||||||
| Other identified debt-creating flows | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| 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 | |||||||
| Debt relief (HIPC and other) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Other (specify, e.g. bank recapitalization) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| Residual, including asset changes | 2.2 | 1.6 | 0.1 | −1.3 | −2.5 | −3.0 | 0.2 | 0.2 | 0.6 | 0.1 | −0.1 | |||||||
| Other Sustainability Indicators | ||||||||||||||||||
| PV of public sector debt | … | … | 43.5 | 40.9 | 37.9 | 34.7 | 34.3 | 34.2 | 34.7 | 40.5 | 47.9 | |||||||
| of which: foreign-currency denominated | … | … | 43.5 | 40.9 | 37.9 | 34.7 | 34.3 | 34.2 | 34.7 | 40.5 | 47.9 | |||||||
| of which: external | … | … | 40.0 | 37.4 | 34.5 | 31.5 | 31.1 | 31.1 | 31.7 | 37.8 | 45.8 | |||||||
| PV of contingent liabilities (not included in public sector debt) | … | … | … | … | … | … | … | … | … | … | … | |||||||
| Gross financing need 2/ | 4.0 | 2.6 | 3.4 | 4.7 | 5.9 | 6.3 | 6.7 | 6.7 | 6.6 | 7.1 | 5.5 | |||||||
| PV of public sector debt-to-revenue and grants ratio (in percent) | … | … | 76.4 | 65.4 | 58.4 | 54.3 | 54.6 | 55.6 | 57.6 | 75.2 | 93.8 | |||||||
| PV of public sector debt-to-revenue ratio (in percent) | … | … | 165.0 | 161.6 | 150.7 | 136.6 | 134.8 | 135.4 | 138.7 | 112.6 | 133.8 | |||||||
| of which: external 3/ | … | … | 151.6 | 147.9 | 137.2 | 123.8 | 122.3 | 123.2 | 126.8 | 105.2 | 127.9 | |||||||
| Debt service-to-revenue and grants ratio (in percent) 4/ | 6.2 | 6.9 | 6.8 | 6.1 | 5.9 | 5.8 | 6.3 | 6.2 | 5.7 | 6.1 | 4.2 | |||||||
| Debt service-to-revenue ratio (in percent) 4/ | 15.5 | 15.5 | 14.8 | 15.1 | 15.2 | 14.5 | 15.6 | 15.0 | 13.6 | 9.2 | 6.0 | |||||||
| Primary deficit that stabilizes the debt-to-GDP ratio | −1.9 | −3.9 | −2.0 | 1.1 | 2.7 | 3.3 | −0.1 | 0.0 | −0.5 | −0.3 | −0.1 | |||||||
| Key macroeconomic and fiscal assumptions | ||||||||||||||||||
| Real GDP growth (in percent) | 2.1 | −0.9 | 0.4 | 1.5 | 2.6 | 1.4 | 1.7 | 1.8 | 1.6 | 1.6 | 1.3 | 1.6 | 1.3 | 1.3 | 1.3 | |||
| Average nominal interest rate on forex debt (in percent) | 2.6 | 2.4 | 2.3 | 2.9 | 0.5 | 2.3 | 2.2 | 2.4 | 2.6 | 2.6 | 2.6 | 2.4 | 2.7 | 2.8 | 2.7 | |||
| Average real interest rate on domestic debt (in percent) | … | … | … | … | … | … | … | … | … | … | … | … | … | … | … | |||
| Real exchange rate depreciation (in percent, + indicates depreciation) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | … | … | … | … | … | … | … | … | … | |||
| Inflation rate (GDP deflator, in percent) | 1.0 | −0.9 | −1.5 | 1.5 | 1.8 | 0.5 | 0.8 | 1.3 | 1.3 | 1.5 | 1.5 | 1.1 | 1.1 | 1.1 | 1.1 | |||
| Growth of real primary spending (deflated by GDP deflator, in percent) | 5.8 | −10.0 | 11.4 | 0.7 | 5.4 | 14.9 | 7.8 | 1.3 | 0.1 | −0.1 | −0.1 | 4.0 | 0.2 | 0.9 | 0.3 | |||
| Grant element of new external borrowing (in percent) | … | … | … | … | … | … | … | … | 45.5 | 45.1 | 44.6 | 45.1 | 43.8 | 44.0 | … | |||
[Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.]
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Marshall Islands: Sensitivity Analysis for Key Indicators of Public Debt FY2016–36
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
Marshall Islands: Sensitivity Analysis for Key Indicators of Public Debt FY2016–36
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2026 | 2036 | |
| PV of Debt-to-GDP Ratio | ||||||||
| Baseline | 41 | 38 | 35 | 34 | 34 | 35 | 40 | 48 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 41 | 37 | 32 | 30 | 28 | 26 | 18 | −3 |
| A2. Primary balance is unchanged from 2016 | 41 | 37 | 33 | 31 | 30 | 29 | 24 | 8 |
| A3. Permanently lower GDP growth 1/ | 41 | 38 | 35 | 35 | 36 | 37 | 49 | 81 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2017-2018 | 41 | 39 | 38 | 39 | 39 | 41 | 53 | 74 |
| B2. Primary balance is at historical average minus one standard deviations in 2017-2018 | 41 | 38 | 34 | 33 | 33 | 34 | 40 | 47 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 41 | 38 | 34 | 34 | 34 | 35 | 44 | 59 |
| B4. One-time 30 percent real depreciation in 2017 | 41 | 56 | 52 | 51 | 50 | 50 | 54 | 58 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2017 | 41 | 44 | 41 | 40 | 40 | 41 | 47 | 53 |
| PV of Debt-to-Revenue Ratio 2/ | ||||||||
| Baseline | 65 | 58 | 54 | 55 | 56 | 58 | 75 | 94 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 65 | 57 | 50 | 47 | 45 | 43 | 34 | −6 |
| A2. Primary balance is unchanged from 2016 | 65 | 57 | 51 | 50 | 48 | 47 | 44 | 16 |
| A3. Permanently lower GDP growth 1/ | 65 | 59 | 55 | 56 | 57 | 60 | 89 | 153 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2017-2018 | 65 | 60 | 58 | 59 | 62 | 65 | 96 | 142 |
| B2. Primary balance is at historical average minus one standard deviations in 2017-2018 | 65 | 58 | 53 | 53 | 54 | 56 | 74 | 92 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 65 | 58 | 52 | 53 | 55 | 58 | 81 | 115 |
| B4. One-time 30 percent real depreciation in 2017 | 65 | 86 | 81 | 81 | 81 | 83 | 100 | 114 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2017 | 65 | 67 | 64 | 64 | 65 | 68 | 87 | 105 |
| Debt Service-to-Revenue Ratio 2/ | ||||||||
| Baseline | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 4 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 6 | 6 | 6 | 6 | 6 | 5 | 5 | −2 |
| A2. Primary balance is unchanged from 2016 | 6 | 6 | 6 | 6 | 6 | 6 | 5 | 0 |
| A3. Permanently lower GDP growth 1/ | 6 | 6 | 6 | 6 | 6 | 6 | 7 | 7 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2017-2018 | 6 | 6 | 6 | 7 | 6 | 6 | 7 | 7 |
| B2. Primary balance is at historical average minus one standard deviations in 2017-2018 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 4 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 5 |
| B4. One-time 30 percent real depreciation in 2017 | 6 | 7 | 8 | 9 | 9 | 8 | 9 | 8 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2017 | 6 | 6 | 6 | 7 | 6 | 6 | 7 | 5 |
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
Marshall Islands: Sensitivity Analysis for Key Indicators of Public Debt FY2016–36
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2026 | 2036 | |
| PV of Debt-to-GDP Ratio | ||||||||
| Baseline | 41 | 38 | 35 | 34 | 34 | 35 | 40 | 48 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 41 | 37 | 32 | 30 | 28 | 26 | 18 | −3 |
| A2. Primary balance is unchanged from 2016 | 41 | 37 | 33 | 31 | 30 | 29 | 24 | 8 |
| A3. Permanently lower GDP growth 1/ | 41 | 38 | 35 | 35 | 36 | 37 | 49 | 81 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2017-2018 | 41 | 39 | 38 | 39 | 39 | 41 | 53 | 74 |
| B2. Primary balance is at historical average minus one standard deviations in 2017-2018 | 41 | 38 | 34 | 33 | 33 | 34 | 40 | 47 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 41 | 38 | 34 | 34 | 34 | 35 | 44 | 59 |
| B4. One-time 30 percent real depreciation in 2017 | 41 | 56 | 52 | 51 | 50 | 50 | 54 | 58 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2017 | 41 | 44 | 41 | 40 | 40 | 41 | 47 | 53 |
| PV of Debt-to-Revenue Ratio 2/ | ||||||||
| Baseline | 65 | 58 | 54 | 55 | 56 | 58 | 75 | 94 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 65 | 57 | 50 | 47 | 45 | 43 | 34 | −6 |
| A2. Primary balance is unchanged from 2016 | 65 | 57 | 51 | 50 | 48 | 47 | 44 | 16 |
| A3. Permanently lower GDP growth 1/ | 65 | 59 | 55 | 56 | 57 | 60 | 89 | 153 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2017-2018 | 65 | 60 | 58 | 59 | 62 | 65 | 96 | 142 |
| B2. Primary balance is at historical average minus one standard deviations in 2017-2018 | 65 | 58 | 53 | 53 | 54 | 56 | 74 | 92 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 65 | 58 | 52 | 53 | 55 | 58 | 81 | 115 |
| B4. One-time 30 percent real depreciation in 2017 | 65 | 86 | 81 | 81 | 81 | 83 | 100 | 114 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2017 | 65 | 67 | 64 | 64 | 65 | 68 | 87 | 105 |
| Debt Service-to-Revenue Ratio 2/ | ||||||||
| Baseline | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 4 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 6 | 6 | 6 | 6 | 6 | 5 | 5 | −2 |
| A2. Primary balance is unchanged from 2016 | 6 | 6 | 6 | 6 | 6 | 6 | 5 | 0 |
| A3. Permanently lower GDP growth 1/ | 6 | 6 | 6 | 6 | 6 | 6 | 7 | 7 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2017-2018 | 6 | 6 | 6 | 7 | 6 | 6 | 7 | 7 |
| B2. Primary balance is at historical average minus one standard deviations in 2017-2018 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 4 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 5 |
| B4. One-time 30 percent real depreciation in 2017 | 6 | 7 | 8 | 9 | 9 | 8 | 9 | 8 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2017 | 6 | 6 | 6 | 7 | 6 | 6 | 7 | 5 |
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
The low-income country debt sustainability framework recognizes that better policies and institutions allow countries to manage higher levels of debt, and thus the threshold levels for debt indicators are policy-dependent. In particular, the quality of a country’s policies and institutions is measured by the World Bank’s Country Policy and Institutional Assessment (CPIA) index and classified into three categories: strong, medium, and weak. For the analysis, a 5 percent discount rate is assumed for present value calculations.
Holding the set of key variables related to debt dynamics at ten-year averages does not appear to provide a relevant comparator to the baseline. In particular, the scenario in which variables are at their historical levels is regarded as too benign due to historically smaller current account deficits that were financed in the past by large one-off FDI.
