On The Sustainability of External Debt: Is Debt Relief Enough?
Elaborating on PAsinetti (1998), the 'Geometry of Debt Sustainability' - GDS - represents a simple analytical tool for the analysis of the long run sustainability of foreign debt. GDS provides a simple analysis of three aspects of debt sustainability. It points up how the 'structural' aspect - NICA, the non-interest current account - is closely interlinked with the purely 'financial' aspect. The paper focuses on low income countries, LICs, which face several daunting tasks at once: economic growth, human development and regular debt service. Therefore GDS is also used to analyse the 'human development' aspect of debt sustainability. By considering the three aspects together it emerges that there might be a very stringent trade-off between regular debt service and human development expenditures. All the more so because mosto LICs suffer from structural NICA deficits and GDS highlights the fact its improvement is a anecessary condition to achieve long-run debt sustainability. However, export diversification and the building of stronger trading capacities take time. GDS shows why both debt cancellation and additional aid are necessary to give indebted low income economies a chance to improve both human development and long-run economic viability.
|Date of creation:||Apr 2009|
|Contact details of provider:|| Postal: Via S. Felice, 5 - 27100 Pavia|
Web page: http://dipartimenti.unipv.eu/on-dip/epmq/Home.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:trn:utwpde:0508 is not listed on IDEAS
- Cohen, Daniel & Fally, Thibault & Villemot, Sébastien, 2006.
"In Favour of a Fund to Stabilize Commodity Exporters' Income,"
CEPR Discussion Papers
5550, C.E.P.R. Discussion Papers.
- Daniel Cohen & Thibault Fally & Sébastien Villemot, 2007. "In Favour of a Fund to Stabilise Commodity Exporters' Income," OECD Development Centre Policy Insights 50, OECD Publishing.
When requesting a correction, please mention this item's handle: RePEc:pav:wpaper:094. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paolo Bonomolo)
If references are entirely missing, you can add them using this form.