Review of The Debt Sustainability Framework For Market Access Countries

Review of The Debt Sustainability Framework For Market Access Countries
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Volume/Issue: Volume 2021 Issue 003
Publication date: February 2021
ISBN: 9781513568324
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Topics covered in this book

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Exports and Imports , Economics- Macroeconomics , Money and Monetary Policy , Public Finance , International - Economics , IMF team , resource requirement , definition of stress event , sustainability assessment , I , backtesting result , Debt sustainability analysis , Debt sustainability , Fiscal stance , Debt refinancing , Global

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.