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Debt Sustainability Analysis: Re-evaluating Debt Sustainability Analyses in the Context of Hegemonic Power and Sovereign Debt Restructuring

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  • John Oduk

    (African Forum and Network on Debt and Development (AFRODAD))

  • Catherine Mithia

    (African Forum and Network on Debt and Development (AFRODAD))

Abstract

This article critiques the limited scope and potential biases of the Debt Sustainability Analysis (DSA) framework, particularly as employed by the International Monetary Fund (IMF). Despite its widespread use in assessing a country’s debt sustainability, the DSA has been criticized for its inherent limitations in accurately measuring its true debt capacity. The study argues that the DSA framework often serves as a tool to maintain the hegemonic power of international financial institutions and their investors. By prioritizing fiscal consolidation and other strategies that may not align with sustainable economic development, the DSA can exacerbate debt repayment difficulties in developing countries. Through a literature review, the article analyzes the disconnect between the purported objectivity of IMF’s DSA and its role in perpetuating institutional dominance in sovereign debt restructuring. It demonstrates how DSAs’ limited scope and focus on short-term stability can disadvantage developing nations by aligning with the interests of powerful institutions rather than promoting long-term sustainable development.

Suggested Citation

  • John Oduk & Catherine Mithia, 2024. "Debt Sustainability Analysis: Re-evaluating Debt Sustainability Analyses in the Context of Hegemonic Power and Sovereign Debt Restructuring," Development, Palgrave Macmillan;Society for International Deveopment, vol. 67(3), pages 220-232, December.
    • Handle: RePEc:pal:develp:v:67:y:2024:i:3:d:10.1057_s41301-025-00439-5
    DOI: 10.1057/s41301-025-00439-5
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    References listed on IDEAS

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    3. Krugman, Paul, 1988. "Financing vs. forgiving a debt overhang," Journal of Development Economics, Elsevier, vol. 29(3), pages 253-268, November.
    4. Ronald Mangani, 2022. "The Political Economy of Debt in Africa: Critical Propositions to Stop the Bleeding," Development, Palgrave Macmillan;Society for International Deveopment, vol. 65(2), pages 108-115, December.
    5. Jonathan Eaton & Mark Gersovitz, 1981. "Debt with Potential Repudiation: Theoretical and Empirical Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 48(2), pages 289-309.
    6. Peter Hjertholm, 2001. "Debt Relief and the Rule of Thumb: Analytical History of HIPC Debt Sustainability Targets," WIDER Working Paper Series DP2001-68, World Institute for Development Economic Research (UNU-WIDER).
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