Policy Papers

Review of The Debt Sustainability Framework For Market Access Countries

Publication Date:

February 3, 2021

Electronic Access:

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Summary:

A careful review has revealed significant scope to modernize and better align the MAC DSA with its objectives and the IMF’s lending framework. This note proposes replacing the current framework with a new methodology based on risk assessments at three different horizons. Extensive testing has shown that the proposed framework has much better predictive accuracy than the current one. In addition to predicting sovereign stress, the framework can be used to derive statements about debt stabilization under current policies and about debt sustainability.

Series:

Policy Paper No. 2021/003

Subject:

Asset and liability management Debt refinancing Debt sustainability Debt sustainability analysis External debt Fiscal policy Fiscal stance Monetary policy Political economy Public debt

Frequency:

occasional