Debt Sustainability Analyses for Low-Income Countries: An Assessment of Projection Performance

October 30, 2017

Preview Citation

Format: Chicago

Henry Mooney, and Constance de Soyres. Debt Sustainability Analyses for Low-Income Countries: An Assessment of Projection Performance, (USA: International Monetary Fund, 2017) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper develops new error assessment methods to evaluate the performance of debt sustainability analyses (DSAs) for low-income countries (LICs) from 2005-2015. We find some evidence of a bias towards optimism for public and external debt projections, which was most appreciable for LICs with the highest incomes, prospects for market access, and at ‘moderate’ risk of debt distress. This was often driven by overly-ambitious fiscal and/or growth forecasts, and projected ‘residuals’. When we control for unanticipated shocks, we find that biases remain evident, driven in part by optimism regarding government fiscal reaction functions and expected growth dividends from investment.

Subject: Debt sustainability analysis, External debt, Government debt management, Oil prices, Prices, Public debt, Public financial management (PFM)

Keywords: Balance of payments, Debt relief, Debt sustainability analysis, Debt sustainability analysis (DSA), DSA bias, DSA debt projection, DSA projection, Fiscal reaction function, Forecast error, Global, Government debt management, Growth-investment nexus, IMF, IMF DSA database, IMF-World Bank LIC-DSA framework, Low-Income Countries, Macroeconomic forecast, Oil prices, Projection accuracy, Projection bias, Projection error, Real GDP, Sovereign debt, World Bank, WP

Publication Details

Pages:

48
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 2017/220
Stock No:

WPIEA2017220
ISBN:

9781484324790
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers