BRIEF

Debt Sustainability Analysis (DSA)

January 9, 2018


The Debt Sustainability Analysis is a tool that is used as part of a framework developed by the World Bank and the International Monetary Fund to help guide countries and donors in mobilizing critical financing for low-income countries, while reducing the chances of an excessive build-up of debt.

The Debt Sustainability Framework (DSF), developed in 2005, is designed to guide the borrowing decisions of low-income countries in a way that matches their financing needs with their current and prospective ability to repay debt. It also allows creditors to tailor their financing terms in anticipation of future risks.

A key part of the framework is Debt Sustainability Analysis (DSA), a structured examination of a country's debt that debt experts from the IMF and World Bank conduct regularly in low-income and middle-income countries. Some of the focal points of these analyses are:

  • an analysis of a country’s projected debt burden over the next 20 years and its vulnerability to external and policy shocks;
  • an assessment of the risk of external debt distress in that time, based on indicative debt burden thresholds that depend on the quality of the country’s policies and institutions; and
  • recommendations for a borrowing (and lending) strategy that limits the risk of debt distress.


RESOURCES
PUBLICATIONS
  • Review of the debt sustainability framework for low income countries : proposed reforms (October 2017) [Document]
  • Revisiting the Debt Sustainability Framework for Low-Income Countries (January 2012) - [Document]
  • A Review of Some Aspects of the Low-Income Country Debt Sustainability Framework (August 2009) - [Document]
  • Applying the Debt Sustainability Framework for Low-Income Countries Post Debt Relief (November 2006) - [Document]
  • Review of Low-Income Country Debt Sustainability Framework and Implications of the MDRI (March 2006) - [Document]
  • When Is External Debt Sustainable? (March 2006) - [Document]
  • Operational Framework for Debt Sustainability Assessments in Low-Income Countries: Further Considerations (March 2005) - [Document]
  • Public Summary: Debt Sustainability in Low-Income Countries: Further Considerations on an Operational Framework and Policy Implications (November 2004) - [Document]
  • Debt Sustainability in Low-Income Countries: Further Considerations on an Operational Framework and Policy Implications (September 2004) - [Document]
  • Debt Sustainability in Low-Income Countries: Proposal for an Operational Framework and Policy Implications (February 2004) - [Document]