Staff guidance note on the application of the joint bank-fund debt sustainability framework for low-income countries (English)

The debt sustainability framework (DSF) was introduced in 2005 and has been reviewed on three occasions: 2006, 2009, and 2012. Low-income countries (LICs) face significant challenges in meeting their development objectives while at the same time ensuring... See More + The debt sustainability framework (DSF) was introduced in 2005 and has been reviewed on three occasions: 2006, 2009, and 2012. 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 Development Association (IDA) and the International Monetary Fund (IMF) endorsed the DSF, a tool developed jointly by World Bank and IMF 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. This guidance note incorporates modifications and innovations to the framework approved by the Executive Boards at the time of the 2012 review. These include revised thresholds for public and publicly guaranteed external debt; new benchmarks for total public debt; revised guidance on incorporating remittances; an additional "probability approach" that uses country-specific information to help determine the risk of external debt distress; and a new assessment of the overall risk of debt distress.  See Less -