This debt sustainability analysis (DSA) fully updates the May 2017 joint IMF/WB DSA. Bangladesh’s risks of external debt distress and overall debt distress continue to be assessed as low.
... See More + The FY17 fiscal deficit remains well below the 5 percent of GDP budget target. Spending control and slower implementation of development projects more than compensated for revenue underperformance. The issuance of National Savings Certificates (NSCs) remains high. Over the medium term, debt ratios are projected to remain on a sustainable path, assuming continued spending restraint, with the deficit used to finance productive investment. Boosting budget revenue is key to creating fiscal space for diversification and growth. The authorities are delaying the implementation of the VAT reform further by two years. Any additional costs from spending pressures ahead of the parliamentary elections and from the Rohingya refugees remain key risks.
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São Tomé and Príncipe is classified as being in debt distress according to this joint World Bank-IMF low-income country debt sustainability analysis (DSA).
... See More + This assessment has changed from the previous DSA completed in December 2017 (high risk of external debt distress) due to the prolonged negotiations on rescheduling external arrears. Nonetheless, São Tomé and Príncipe’s debt ratios have improved since the previous DSA. Specifically, the ratio of the present value of public and publicly-guaranteed (PPG) external debt to gross domestic product (GDP) no longer exceeds its threshold under the baseline scenario, due to lower-than-expected loan disbursements in 2017, an appreciation of the euro vis-à-vis the U.S. dollar, and higher-than-expected GDP deflator growth. As in the previous DSA, the debt service ratios stay below their respective thresholds under almost all scenarios. Nevertheless, the ratios of the present value of debt to exports and to revenue still exceed their respective thresholds under the baseline scenario early in the projection period, though they decline over time. This DSA underscores the importance of lowering all PPG external debt indicators below their thresholds by continuing fiscal consolidation, eschewing non-concessional loans, promoting growth, and expanding the export base.
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The 2018 Debt Sustainability Analysis (DSA) assesses that the Republic of the Marshall Islands (RMI) remains at high risk of debt distress. The ratios of the present value (PV) of external public and publicly-guaranteed (PPG) debt to GDP and to exports are currently just below their respective policy-dependent indicative thresholds.
... See More + The PV of the PPG debt-to-GDP ratio is expected to decline slightly in the near term, but to start increasing and exceed its indicative threshold in the medium to long term. Stress tests confirm the vulnerability of the debt position to lending terms as well as macroeconomic shocks. Although the RMI does not currently face debt servicing risks, helped by government revenue from fishing licenses and a stable flow of funds from the U.S. Compact grants until FY2023, a lack of fiscal buffers after FY2023 and risks from contingent liabilities call for a fiscal reform strategy. Containing the risk of debt distress requires continuation of grants to support the country’s large development needs, and implementation of fiscal and structural reforms to promote fiscal sustainability and growth.
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Following the restructuring of the debt to Glencore and the progress made in clearing external arrears, debt vulnerabilities declined significantly, and the external risk rating has been upgraded to high.
... See More + The debt sustainability analysis (DSA) shows that all debt burden indicators, except the debt-service-to-revenue ratio which has minor and temporary breaches, are below their respective thresholds in the baseline from 2018 onwards. The debt-service-to-revenue ratio, falls below the threshold in 2019 and remains so throughout the projection period, except for minor breaches in 2020 and 2021. Overall, total public debt vulnerabilities are elevated although the present value (PV) of the public debt-to- gross domestic product (GDP) ratio remains on a downward trajectory. The fixed primary balance scenario, which keeps the primary deficit-to-GDP ratio unchanged from 2017, shows the debt ratio declining at a slower pace throughout the forecast period, further highlighting the need to adhere to the prudent fiscal policy framework underpinning the International Monetary Fund (IMF)-supported program. Adoption and implementation of an appropriate debt management strategy, while making progress in economic diversification will further reduce vulnerabilities.
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This report provides a Debt Sustainability Analysis (LIC-DSA) of Grenada’s public and publicly guaranteed (PPG) external and total debt for 2018.
... See More + The macro-framework incorporates all previous debt restructurings, including the November 2017 haircut on commercial debt. Total public debt has declined from 108 percent of GDP in 2013 to below 71 percent of GDP in 2017 with external public debt declining to 48 percent of GDP. This reduction was made possible through a comprehensive restructuring of Grenada’s public debt, fiscal consolidation, and robust economic growth. Nevertheless, with some US$15.7 million (1.4 percent of GDP) in unresolved arrears to official bilateral creditors, Grenada’s external debt risk rating remains ‘in debt distress’. Going forward full regularization of arrears and continued fiscal discipline will be needed to keep the debt on a downward path and withstand the existing vulnerabilities to external shocks and natural disasters.
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Madagascar’s risk of external debt distress is assessed to be moderate, in line with the last debt sustainability analysis (DSA) of June 2017, since the dynamics of Madagascar’s external public and publicly-guaranteed (PPG) debt remain sustainable under the baseline.
... See More + The public DSA shows total (domestic and external) PPG debt is also sustainable under the baseline, so risks to domestic debt are not assessed as significant. However, stress tests breach the prudent benchmark for the public DSA (covering both domestic and external debt) and, in only some instances, for the external DSA. The analysis suggests that shocks to gross domestic product (GDP) growth are the main potential source of vulnerability, especially for the public DSA. A weaker currency, widened fiscal deficits, lower exports, or higher interest rates present additional risks. This DSA reflects updated and more detailed loan data, which include marginally less favorable financing conditions than in the last DSA.
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Central African Republic (C.A.R.) continues to be assessed at high risk of external debt distress. This rating is unchanged from the previous analysis and consistent with the staff report of December 2017.
... See More + Under the baseline scenario, one debt burden indicator breaches its threshold. And stress tests show that both external and total public debt sustainability is vulnerable to slower gross domestic product (GDP), export, and revenue growth. For total public and publicly guaranteed (PPG) debt (external plus domestic), the debt-to-GDP indicator remains below its prudent benchmark. However, the existence of large arrears to suppliers and unpaid public-sector wages in the domestic debt stock justifies the assessment of a heightened overall risk of debt distress. Contingent liabilities can further exacerbate vulnerability concerns. To safeguard debt sustainability, the government’s investment program requires grant financing, with highly concessional debt financing to be considered only in exceptional cases.
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Cameroon’s risk of external debt distress remains high. Fiscal consolidation and the Fund-supported envisaged reforms, coupled with the increasing share of concessional new borrowing, would improve the debt profile over time.
... See More + However, at present, Cameroon’s external debt remains highly vulnerable to exogenous shocks: the policy-dependent threshold for the present value of debt to exports and debt service to exports are breached in the baseline program scenario as well as under standard stress tests. Mitigating risks to public debt thus requires a number of policy actions including: (i) a resolute and effective fiscal consolidation; (ii) a shift in the composition of new borrowing towards concessional loans; (iii) enhanced controls on externally-financed investment projects at all levels of government; (iv) implementation of policies to boost growth and non-oil exports; and (iv) a strengthening of public debt management.
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Ethiopia’s external debt remains sustainable, but the risk of external debt distress has increased from ‘low’ to ‘moderate’ due to weak export performance and higher than expected non-concessional borrowing, reflecting faster execution of the government’s investment program.
... See More + Over the longer term, a recovery in exports and a moderation of non-concessional borrowing will improve external debt indicators. In assessing the risk of external debt distress, the DSA calls for the use of judgment, focusing in particular on capacity to repay. In this regard, the fact that external loans are being used primarily to finance growth-enhancing infrastructure helps reduce the risk of debt distress. However, uncertainties related to foreign demand and foreign financing for investment present downside risks exporting growth. Total public sector debt (domestic and external) also remains sustainable, though vulnerable to risks. To enhance debt sustainability, it remains essential to promote the growth and diversification of exports. Ensuring an appropriate pace of public borrowing, especially from external, non-concessional sources, is also critical to ensure that public investment does not undermine debt sustainability. These findings highlight the importance of having a medium-term debt management strategy, and of increasing oversight of state-owned enterprises, which have been in the lead for major infrastructure projects and thus have contracted much of the external, non-concessional debt. Ethiopia’s external debt remains sustainable, but the risk of external debt distress has increased from ‘low’ to ‘moderate’ due to weak export performance and higher than expected non-concessional borrowing, reflecting faster execution of the government’s investment program. Over the longer term, a recovery in exports and a moderation of non-concessional borrowing will improve external debt indicators. In assessing the risk of external debt distress, the DSA calls for the use of judgment, focusing in particular on capacity to repay. In this regard, the fact that external loans are being used primarily to finance growth-enhancing infrastructure helps reduce the risk of debt distress. However, uncertainties related to foreign demand and foreign financing for investment present downside risks to export growth. Total public sector debt (domestic and external) also remains sustainable, though vulnerable to risks. To enhance debt sustainability, it remains essential to promote the growth and diversification of exports. Ensuring an appropriate pace of public borrowing, especially from external, non-concessional sources, is also critical to ensure that public investment does not undermine debt sustainability. These findings highlight the importance of having a medium-term debt management strategy, and of increasing oversight of state-owned enterprises, which have been in the lead for major infrastructure projects and thus have contracted much of the external, non-concessional debt.
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Mauritanias risk of debt distress is rated high due to a breach of the debt-to-GDP ratio threshold under the baseline scenario. This represents a downgrade from the moderate risk of debt distress at the time of the 2012 Debt Sustainability Analysis.
... See More + The downgrade is mostly due to a combination of higher projected debt disbursements and a more stringent level of the policy-dependent debt thresholds as measured by the World Bank CPIA score. The expected resolution of bilateral debt relief with Kuwait and a hike in export-led growth are projected to lower Mauritanias debt level and enhance the capacity of carrying debt over the next years; however, strengthening the quality of policies and institutions and particularly debt management capacity will prove critical to rapidly revert to a moderate risk of debt distress. Overall, external debt dynamics tend to follow public debt dynamics, while private sector debt represents a modest portion of external debt.
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The updated debt sustainability analysis indicates that Liberia's risk of external debt distress remains low. The present value of the external debt stock is projected to remain sustainable with all external debt indicators below the policy-related thresholds.
... See More + Nonetheless, the pace of new borrowing has accelerated over the past year. This rapid accumulation of new loan commitments remains broadly consistent with the temporary scaling up of public investment envisaged under the program. Nonetheless, the authorities should continue to prioritize new financing for strategic projects on highly concessional terms to ensure that public debt remains sustainable.
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This debt sustainability analysis builds on the one conducted at the time of the 2013 article four consultation. It finds that Cameroon's external debt remains sustainable, with all external debt ratios staying below their respective thresholds.
... See More + However, the risk of debt distress has increased from 'low' to 'moderate,' as the external debt indicator for the net present value of debt over exports breaches the policy-dependent threshold under a classic shock to exports. The underlying macroeconomic assumptions in this analysis are comparable to those used in the previous one. However, the composition and terms of new external debt have been adjusted to reflect the large, undisbursed debt overhang contracted on non-concessional terms to finance the country's ambitious public investment program. Heavier external borrowing than projected could jeopardize debt sustainability over the long term and calls for a prudent approach regarding the terms of borrowing. Moreover, significant vulnerabilities related to a weak domestic debt policy, and a fiscal situation projected to become increasingly fragile, heighten the risk of overall debt distress.
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Senegal remains at a low risk of debt distress. Under the baseline scenario, which is consistent with higher program ceilings for non-concessional and semi-concessional borrowing, all the debt burden indicators remain way below policy-dependent indicative thresholds, and debt ratios in present value terms are lower than in the previous debt sustainability analysis (DSA) reflecting the use of a higher discount rate.
... See More + There are in stress tests small and temporary breaches of the threshold on the debt to gross domestic product (GDP) ratio and on the debt service to revenue ratio, the latter corresponding to the repayment of two Eurobonds. In addition, the probability approach shows a favorable outlook, reflecting Senegal's high country policy and institutional assessment (CPIA) score. The DSA suggests that there is not much space for higher fiscal deficits if the low risk rating is to be preserved. It also indicates a need for caution in the recourse to non-concessional borrowing.
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This low-income debt sustainability analysis (LIC DSA) updates the joint International Development Association (IDA) and International Monetary Fund (IMF) DSA from February 14, 2013, reflecting the most recent macroeconomic developments.
... See More + This updated DSA indicates that Burundi continues to be assessed at a high risk of debt distress. Both baseline public and external DSA suggest Burundi's public sector debt is sustainable given the current size and evolution of the debt stock. Compared to the 2012 DSA assessment, overall public debt sustainability improves modestly. Debt sustainability remains highly sensitive to shocks, due mainly to the narrow export base. The public DSA suggests that Burundi's overall public sector debt sustainability indicators are projected to improve in the medium and long run. However, the large downside risks and the vulnerability of the indicators to shocks point to the need for prudent fiscal and debt policies, and for structural reforms to promote private sector-led growth and exports diversification.
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The analysis based on the joint bank-fund debt sustainability framework (DSF) for low income countries shows that Sao Tome and Principe is at a high risk of debt distress.
... See More + The assessment of high risk of debt distress is unchanged from the previous DSA. The update reflects the opening of a United States (U.S.) 40 million dollars (about 13 percent of gross domestic product (GDP)) line of credit with Angola and recent economic data and forecasts, including a lower than originally projected end-2013 debt stock outturn. The debt service ratios are now projected to deteriorate further and remain longer above sustainability thresholds due to the relatively low level of concessionality stipulated in the line of credit with Angola. However, the risks appear manageable over the medium term if the authorities are able to move forward with a planned fiscal adjustment of 1 percent of GDP over 2015-17, and return to grants and highly concessional lending to fund in full the public investment program once the Angola loan is fully disbursed, that is, from 2016.
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Chad's public domestic and external debt indicators have remained relatively stable in the last few years. However, the risk of debt distress remains high even after the decision to cancel the non-concessional Master Facility Agreement (MFA) signed with the Eximbank of China in August 2011, and partly because of the contracting of a non-concessional US$600 million oil sales' advance operation to cover oil revenue shortfalls in 2013.
... See More + The projected steady decline in oil exports and associated fiscal revenues (barring new discoveries) is a critical challenge over the medium-term requiring a steady fiscal adjustment and economic diversification.
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Kiribati continues to be at high risk of debt distress according to this update of the debt sustainability analysis (DSA). Although unusually high fishing license fees improved the fiscal position recently, containing the risk of debt distress will require prudent financing by continuing to secure grants to support the countrys large development needs, and implementing fiscal and structural reform agenda that would ensure fiscal sustainability and raise long-term growth.
... See More + In particular, it is important to pursue fiscal consolidation by continuing to contain and improve quality of expenditures, as well as through revenue enhancing measures.
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Nepal is assessed to be at low risk of debt distress compared to the previous assessment of moderate risk, mainly due to reduced estimates of the cost of a potential financial sector shock and the increase in the discount rate used.
... See More + Generally prudent fiscal policy and low execution of capital spending budgets have underpinned declining levels of public debt. The baseline external public debt indicators show that external debt dynamics are broadly sound and remain resilient to standard stress tests. Efforts to raise capital investment would enhance long term growth; in this context, raising net incurrence of liabilities to around 2.5 percent of GDP over the medium term would help boost domestic capacity while maintaining a stable debt profile.
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Using the joint International Development Association (IDA) - International Monetary Fund (IMF) debt sustainability framework for low income countries, the debt sustainability analysis (DSA) assesses Madagascars risk of external debt distress to be low.
... See More + The public DSA suggests that Madagascars total public and publically guaranteed (PPG) debt dynamics are sustainable, although weak fiscal revenue generation is a source of vulnerability. This DSA has been prepared jointly by IMF and World Bank staff. It is based on the framework for low-income countries approved by the respective Executive Boards. The framework takes into account indicative thresholds for debt burden indicators determined by the quality of the countrys policies and institutions. The assessment comprises a baseline scenario and a set of alternative scenarios.
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This debt sustainability analysis (DSA) updates the joint bank-fund DSA update from November 11, 2013. The results indicate that Bangladesh remains at a low risk of external or public debt distress.
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