The IMF has just released to the general public its new toolkit for assessing public debt sustainability in countries that have access to international capital markets.
The tool improves upon the IMF’s previous method of evaluating how much public debt emerging market and advanced economies can safely carry. The new approach takes a more holistic view, assessing the level and trajectory of debt, government financing needs, and vulnerabilities in the debt structure.
The IMF has been working to overhaul its framework for public debt sustainability analysis in market access countries (MAC DSA) over the past two years as the issue of public debt has become increasingly prominent. The global financial crisis and more recent developments have exposed not only significant debt vulnerabilities—particularly in advanced economies, where such concerns had been minimal—but also gaps in the analytical capacity to assess and foresee such risks. The new DSA for market access countries aims to close those gaps by scrutinizing debt sustainability from several different perspectives.
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