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Insights on debt sustainability analysis from an optimizing framework

Insights on debt sustainability analysis from an optimizing framework

Effective official sector surveillance and crisis lending depend upon an accurate assessment of debt sustainability. Debt sustainability analysis (DSA), aims precisely to detect and quantify any latent public debt risks (IMF 2013b), and, also, to determine the combination of official financing and adjustment measures that will bring a country’s debt to a sustainable level. The IMF’s exceptional access policy stipulates a debt restructuring delivering sufficient relief before the IMF can provide financing, if debt is not deemed sustainable with high probability.[…]