Executive Summary
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I.
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Introduction
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II.
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Why is Debt Sustainability Important?
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III.
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An Operational Framework for Debt Sustainability
Assessments
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A.
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General Considerations
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B.
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Empirical Thresholds
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C.
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Analysis of Current and Projected Debt Indicators
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Long-Term Projections and Stress Testing
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Analysis of the Main Debt Sustainability
Concerns
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IV.
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Policy Implications for The Global Community
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A.
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Incorporating Debt Sustainability Considerations
Into External Financing Policies
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Implications for New Lending
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Prospects for Increasing Aid Flows
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B.
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Designing Instruments That Mitigate the Impact
of Exogenous Shocks
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V.
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Policy Implications for Low-Income Countries
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A.
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Improving Policies and Institutions
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B.
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Strengthening Debt Management
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C.
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Increasing Resilience to Exogenous Shocks
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VI.
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Conclusions
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VII.
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Issues for Discussion
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Text Tables
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1.
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Empirical Debt Sustainability Ranges
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2.
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Indicative Policy-Dependent Debt and Debt-Service
Thresholds
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3.
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Concessionality of Loans by Selected Creditors
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Boxes
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1.
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Implementing the HIPC Initiative
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2.
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Methodology for NPV Calculations Under the
Proposed Framework
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3.
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Debt Sustainability Analysis-Illustration
of the Proposed Approach
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4.
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Domestic Debt in Low-Income Countries
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5.
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Adopting An Ex-Ante Framework for New Lending
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6.
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Ex-Post Mechanisms for Mitigating Exogenous
Shocks
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7.
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Official Uses of Commodity Derivative Markets
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Figures
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1.
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Official Development Assistance to Selected
Low-Income Countries, Average 1995–2000
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2.
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NPV of Debt-to-Exports Ratios in Selected
Low-Income Countries, 2001
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3.
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Frequency Distribution of the Present Value
of Debt to GDP for Distress and Non-Distress Events
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4.
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Simulations of Debt-Burden Indicators Under
Alternative Scenarios, 2003–2023
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5.
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Trends in ODA Flows, 1991–2002
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6.
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Composition of Grant Funding, end-2001
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7.
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NPV of Debt, Exports and Output Volatility,
1980–2001
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8.
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Developing Countries' Vulnerability to Exogenous
Shocks
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Appendix I. Empirical Analysis
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Appendix II. Illustration of Proposed
Debt-Sustainability Framework
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Appendix III. Stochastic Simulation
of External Debt Ratio
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References
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