External Debt Management in Low-Income Countries

This paper presents an assessment of Somalia’s eligibility for assistance under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The macroeconomic framework reflects the policy framework underlying the proposed three-year Fund-supported program. The debt relief analysis (DRA) remains largely unchanged, but some of the underlying debt data has been updated to reflect new information from creditors. In addition, this paper presents an assessment of debt management capacity in Somalia and a full Debt Sustainability Analysis under the Debt Sustainability Framework for Low-Income Countries. The DRA reveals that, after traditional debt relief mechanisms are applied, Somalia’s debt burden expressed as the net present value of debt-to-exports ratio is 344.2 percent at the end of December 2018—significantly above the HIPC Initiative threshold. Despite the challenging environment, progress on reform and policy implementation has been good and sustained reforms have translated into economic results. In addition to the coordinated support from the World Bank and the IMF, reforms have been supported by other development partners.

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An Analysis of External Debt and Capital Flight in the Severely Indebted Low Income Countries in Sub-Saharan Africa

IMF Working Papers ◽

10.5089/9781451961119.001 ◽

1997 ◽

Vol 97 (68) ◽

pp. 1 ◽

Cited By ~ 21

Author(s):

Simeon Inidayo Ajayi ◽

Keyword(s):

Low Income ◽

External Debt ◽

Sub Saharan Africa ◽

Low Income Countries ◽

Capital Flight ◽

Sub Saharan

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External Debt, Investment, and Economic Growth: A Seemingly Unrelated Regression Model for Low-Income Countries

Journal of Economic Integration ◽

10.11130/jei.2019.34.4.725 ◽

2019 ◽

Vol 34 (4) ◽

pp. 725-745

Author(s):

HAKIMI Abdelaziz ◽

BOUSSAADA Rim ◽

KARMANI Majdi

Keyword(s):

Economic Growth ◽

Regression Model ◽

Low Income ◽

External Debt ◽

Seemingly Unrelated Regression ◽

Low Income Countries ◽

Unrelated Regression ◽

Seemingly Unrelated Regression Model

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External Debt, Public Investment, and Growth in Low-Income Countries

IMF Working Papers ◽

10.5089/9781451875904.001 ◽

2003 ◽

Vol 03 (249) ◽

pp. 1 ◽

Cited By ~ 36

Author(s):

Toan Quoc Nguyen ◽

Benedict J. Clements ◽

Rina Bhattacharya ◽

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...

Keyword(s):

Low Income ◽

Public Investment ◽

External Debt ◽

Low Income Countries

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Review of the Debt Sustainability Framework for Low Income Countries

Policy Papers ◽

10.5089/9781498346351.007 ◽

2017 ◽

Vol 17 ◽

Cited By ~ 1

Author(s):

Keyword(s):

Low Income ◽

Stress Test ◽

External Debt ◽

Low Income Countries ◽

Debt Sustainability ◽

Debt Burden ◽

The Core ◽

Sustainability Framework ◽

Test Scenarios ◽

Capacity Estimates

The Debt Sustainability Framework for Low-income Countries (LIC DSF) has been the cornerstone of assessments of risks to debt sustainability in LICs. The framework classifies countries based on their assessed debt-carrying capacity, estimates threshold levels for selected debt burden indicators, evaluates baseline projections and stress test scenarios relative to these thresholds, and then combines indicative rules and staff judgment to assign risk ratings of external debt distress. The framework has demonstrated its operational value since the last review was conducted in 2012, but there are areas where new features can be introduced to enhance its performance in assessing risks. Against the backdrop of the evolving nature of risks facing LICs, both staff analysis and stakeholder feedback suggest gaps in the framework to be addressed. Complexity and lack of transparency have also been highlighted as causes for concern. This paper proposes a set of reforms to enhance the value of the LIC DSF for all users. In developing these reforms, staff has been guided by two over-arching principles: a) the core architecture of the DSF—model-based results complemented by judgment—remains appropriate; and b) reforms should ensure that the DSF maintains an appropriate balance by providing countries with early warnings of potential debt distress without unnecessarily constraining their borrowing for development.

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Debt Limits in Fund-Supported Programs - Proposed New Guidelines

Policy Papers ◽

10.5089/9781498335744.007 ◽

2009 ◽

Vol 09 ◽

Cited By ~ 1

Author(s):

Keyword(s):

Low Income ◽

External Debt ◽

International Community ◽

Low Income Countries ◽

Policy And Practice ◽

External Finance ◽

New Guidelines ◽

Development Objectives

Low-income countries (LICs) face significant challenges in meeting their development objectives, while maintaining a sustainable debt position. To address this dilemma, the international community has largely advocated recourse to concessional external finance. The Fund’s existing policy and practice on external debt limits conforms to this preference.

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Staff Guidance Note on the Application of the Joint Bank-Fund Debt Sustainability Framework for Low-Income Countries

Policy Papers ◽

10.5089/9781498341172.007 ◽

2013 ◽

Vol 2013 (41) ◽

Cited By ~ 4

Author(s):

Keyword(s):

International Development ◽

World Bank ◽

Low Income ◽

External Debt ◽

Low Income Countries ◽

Debt Sustainability ◽

Guidance Note ◽

Bank Staff ◽

Development Objectives ◽

Sustainability Framework

Low-income countries (LICs) face significant challenges in meeting their development objectives while at the same time ensuring that their external debt remains sustainable. In April 2005, the Executive Boards of the International Monetary Fund (IMF) and the International Development Association (IDA) endorsed the Debt Sustainability Framework (DSF), a tool developed jointly by IMF and World Bank staff to conduct public and external debt sustainability analysis in low-income countries. The DSF aims to help guide the borrowing decisions of LICs, provide guidance for creditors’ lending and grant allocation decisions, and improve World Bank and IMF assessments and policy advice.

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