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Primary Surpluses and sustainable Debt Levels in Emerging Market Countries
Author:
Mr. Jonathan David Ostry
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and
Mr. Abdul d Abiad
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Series:
IMF Policy Discussion Papers
Volume/Issue:
Volume 2005: Issue 006
Language:
English
Publication Date:
01 Oct 2005
DOI:
https://doi.org/10.5089/9781451975703.003
ISBN:
9781451975703
ISSN:
1564-5193
Pages:
19
Keywords:
PDP; debt; template approach; sc; output gap; sustainable debt; Primary surplus; public debt sustainability; debt level; surplus-generating capacity; underpinning debt sustainability; emerging market country; Fiscal stance; Emerging and frontier financial markets; Debt sustainability analysis; Commodity prices
Legal-disclaimer:
This Policy Discussion Paper should not be reported as representing the views of the IMF. The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Policy Discussion Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
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This paper aims to put some constraints on the way primary surpluses are projected when making assessments of public debt sustainability. Projections should be tied either to the country's historical track record in generating surpluses-if the institutional and other factors accounting for this track record are expected to persist-or to some model that links primary surpluses to their fundamental determinants, either on the basis of constant institutions and policies or a credible reform program. History-based or model-based primary surplus projections provide a useful benchmark for judging the realism of fiscal forecasts underlying debt sustainability calculations. Together with information on future growth and interest rates, the primary surplus projections can be used to generate measures of overborrowing, and the magnitude of adjustment needed to return debt to a sustainable level.
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Cover IMF Policy Discussion Papers
IMF Policy Discussion Papers
ISSN:
1564-5193
Publisher:
International Monetary Fund