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Construction of an Index Tracker for Debt Sustainability Assessment in the Philippines

Author

Listed:
  • Armin Paul Allado

    (Asian Development Bank Institute)

  • Lance Nicklaus Lim

    (Asian Development Bank Institute)

  • Nerie Angeli Tulauan

    (Asian Development Bank Institute)

  • Marvin Kyle Abreu

    (Asian Development Bank Institute)

  • Patricia Louise Agabin

    (Asian Development Bank Institute)

  • Joaquin Charles Regio

    (Asian Development Bank Institute)

Abstract

With economies around the world facing more dire challenges as an immediate result of the COVID-19 pandemic, the need for national governments to borrow funds has grown. The abrupt increase in debt level highlights the importance of implementing suitable models to project emerging debt scenarios and assess debt sustainability. Given that sustainable debt levels vary from country to country, we applied the IMF’s Debt Sustainability Analysis to assess the Philippines’ debt burden over time to be used as an input in the construction of a debt index tracker that incorporates other relevant fiscal and economic indicators. The index tracker serves as an aggregate barometer on whether debt levels have breached the sustainable threshold level. Furthermore, we will utilize the debt tracker to show the implicit debt ceiling and the available fiscal policy room that can respond to the next potential shock.

Suggested Citation

  • Armin Paul Allado & Lance Nicklaus Lim & Nerie Angeli Tulauan & Marvin Kyle Abreu & Patricia Louise Agabin & Joaquin Charles Regio, 2022. "Construction of an Index Tracker for Debt Sustainability Assessment in the Philippines," ADBI Working Papers 1339, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:1339
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    2. Tobias Knedlik & Gregor Von Schweinitz, 2012. "Macroeconomic Imbalances as Indicators for Debt Crises in Europe," Journal of Common Market Studies, Wiley Blackwell, vol. 50(5), pages 726-745, September.
    3. Manasse, Paolo & Roubini, Nouriel, 2009. ""Rules of thumb" for sovereign debt crises," Journal of International Economics, Elsevier, vol. 78(2), pages 192-205, July.
    4. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
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    More about this item

    Keywords

    debt sustainability; Debt Index tracker; sustainable debt threshold level; implicit debt ceiling; av;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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