Public Information Notice: IMF Discusses Operational Debt Sustainability Framework for Low-Income Countries, October 15, 2004

Operational Framework for Debt Sustainability in Low-Income Countries: Implications for Fund Program Design, September 13, 2004

Public Information Notice: IMF Discusses Operational Framework for Debt Sustainability in Low-Income Countries, April 5, 2004

Debt Sustainability in Low-Income Countries— Proposal for an Operational Framework and Policy Implications, February 3, 2004

Debt Sustainability in Low-Income Countries: Further Considerations on an Operational Framework and Policy Implications

Prepared by the Staffs of the IMF and World Bank

Approved by Gobind Nankani and Mark Allen

September 10, 2004

Use the free Adobe Acrobat Reader to view the full text (400 kb pdf file)

Contents

Executive Summary
I.   Introduction
II.   The Analytical Framework
  A.   Threshold Analysis
    Assessing Policies and Institutions
    Interpreting Movements in Discount Rates
    The Different Roles of Debt and Debt-Service Indicators
    Interaction With the HIPC Initiative
  B.   Analysis of Debt Dynamics
    Coverage of Debt
    Clarification of Discount and Exchange Rate Rules
    Assessing Debt Sustainability in Practice-The Case of Uganda
III.   Modalities for Collaboration
  A.   Preparing Debt Sustainability Analyses
    Dialogue with Country Authorities and Other Creditors
    Need for Bank-Fund Collaboration in Preparing DSAs
  B.   Addressing or Averting a Debt Sustainability Problem
    Underlying Principles and Choices
    Responding to a Sustainability Problem
IV.   Implications for World Bank and IMF Operations
  A.   Implications for IDA
  B.   Implications for Fund-Supported Programs and Surveillance
V.   Conclusions and Next Steps
VI.   Issues for Discussion
Tables
1.   Indicative Policy-Dependent Debt and Debt-Service Thresholds
2.   NPV-Based Debt Indicators for IDA/PRGF-Eligible Countries
Boxes
1.   The CPIA Review Process
2.   Link Between Debt and Debt-Service Projections
3.   Proposed Low-Income Country Debt Distress Classifications
4.   Illustrating the Decision Rule: The Case of Kyrgyz Republic
Figures
1.   Movements in Discount Rates
Appendices
1.   Dealing with Domestic Debt (including Country Case Studies)
2.   Assessing Debt Sustainability in Practice-The Case of Uganda