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The IMF-WB Debt Sustainability Framework: Procedures, Applications and Criticisms

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  • Danny Cassimon
  • Karel Verbeke
  • Dennis Essers

    (University of Antwerp)

Abstract

At the completion of the Heavily Indebted Poor Countries (HIPC) initiative and the Multilateral Debt Relief Initiative (MDRI), eligible countries’ public debt sustainability was restored. To ensure that irresponsible borrowing (and lending) policies do not derail debt again, the World Bank and IMF jointly developed the Debt Sustainability Framework (DSF) for low-income countries (LICs). In this article we explain how the DSF works, discuss the different creditor policies the output of the DSF informs, and highlight a number of critiques on the framework. We end by looking at potential modifications to the DSF.

Suggested Citation

  • Danny Cassimon & Karel Verbeke & Dennis Essers, 2017. "The IMF-WB Debt Sustainability Framework: Procedures, Applications and Criticisms," Development Finance Agenda, Chartered Institute of Development Finance, vol. 3(1), pages 4-6.
    • Handle: RePEc:afj:journ4:v:3:y:2020:i:1:p:4-6
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    References listed on IDEAS

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    1. Ugo PANIZZA, 2015. "Debt Sustainability in Low-Income Countries - The Grants versus Loans Debate in a World without Crystal Balls," Working Papers P120, FERDI.
    2. berlage, Lodewijk & cassimon, Danny & dreze, Jacques & Reding, Paul, 2003. "Prospective Aid and Indebtedness Relief: A Proposal," World Development, Elsevier, vol. 31(10), pages 1635-1654, October.
    3. Dani Rodrik, 2008. "Second-Best Institutions," American Economic Review, American Economic Association, vol. 98(2), pages 100-104, May.
    4. Ugo Panizza, 2008. "The External Debt Contentious Six Years after the Monterrey Consensus," G-24 Discussion Papers 51, United Nations Conference on Trade and Development.
    5. Mr. Andrew Berg & Mr. Rafael A Portillo & Mr. Edward F Buffie & Ms. Catherine A Pattillo & Luis-Felipe Zanna, 2012. "Public Investment, Growth, and Debt Sustainability: Putting together the Pieces," IMF Working Papers 2012/144, International Monetary Fund.
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    Cited by:

    1. Danny Cassimon & Dennis Essers & Karel Verbeke, 2018. "Sovereign Debt Workouts: Quo Vadis?," Africagrowth Agenda, Africagrowth Institute, vol. 15(3), pages 4-8.
    2. Danny Cassimon & Dennis Essers & Karel Verbeke, 2016. "The changing face of Rwanda's public debt," BeFinD Working Papers 0114, University of Namur, Department of Economics.

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