This area of work has three goals:
- Ensure that countries that have received debt relief are on a sustainable development track.
- Allow creditors to better anticipate future risks and tailor their financing terms accordingly.
- Help client countries balance their needs for funds with the ability to repay their debts.
The DSF serves as the basis for financing decisions through the International Development Association, the fund for the world's poorest countries. Countries are rated on their risk of debt distress, which determines the proportion of grant and loan assistance a country receives. The DSF also informs the macroeconomic analysis and policy advice that the IMF and World Bank give to governments.
The joint World Bank-IMF Debt Sustainability Framework for Low-Income Countries (LIC-DSF) was introduced in April 2005 and is periodically reviewed. The last review was approved by the Boards of the World Bank and IMF in September 2017. Under the DSF, debt sustainability analyses are conducted regularly for all PRGT-eligible countries that also have access to IDA resources and all countries eligible for IDA grants. All LIC DSAs are produced jointly by IMF and World Bank staff, and the resulting reports are submitted to both Executive Boards, be it for discussion or for information.