• The World Bank and International Monetary Fund work together to support the efforts of low-income countries to achieve their development goals without building up excessive levels of debt. This work is structured through the Debt Sustainability Framework (DSF), and experts use a tool called Debt Sustainability Analysis (DSA) to assess individual countries. Our two institutions use this framework to guide the borrowing decisions of low-income countries in a way that balances their financing needs with their ability to repay – both in the present and in the future.

    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. 

    Resources:

    Guidance Note on the Bank-Fund Sustainability Framework for Low-Income Countries

     

    Updated 7/10/2019.

  • Experts from the World Bank and IMF regularly conduct structured examinations of developing country debt. These Debt Sustainability Analyses (DSA) help guide the future borrowing decisions of low-income countries by balancing their financing needs with the current and prospective ability to repay debt. 

    DSAs focus on three core elements:

    • 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.
       

    CURRENT DEBT SUSTAINABILITY ANALYSIS

    A full inventory of historical DSAs is available.

    CountryRisk of External Debt DistressRisk of Public Debt DistressMost Recent Debt Sustainability Analysis
    AfghanistanHighHigh11/21/2017
    BangladeshLowLow10/1/2018
    BeninModerateModerate 12/28/2018
    BhutanModerateModerate12/18/2018
    Burkina FasoModerateModerate2/7/2019
    CambodiaLowLow2/5/2019
    CameroonHighHigh3/15/2019
    Central African RepublicHigh 6/26/2018
    ChadHighHigh7/13/2018
    Côte d'IvoireModerateModerate2/15/2019
    DominicaHighHigh10/1/2018
    EthiopiaHighHigh12/14/2018
    The GambiaIn distressIn distress10/1/2018
    GhanaHighHigh5/14/2019
    GrenadaIn distress 7/5/2018
    GuineaModerateModerate2/11/2019
    HondurasModerateModerate10/1/2018
    KiribatiHighHigh2/12/2019
    LiberiaModerate 10/1/2018
    MadagascarModerate 6/26/2018
    MalawiModerateHigh12/14/2018
    Marshall IslandsHigh 8/10/2018
    MauritaniaHighHigh12/28/2018
    MyanmarLowLow5/28/2019
    NigerModerateModerate2/15/2019
    Papua New GuineaModerateModerate12/20/2018
    São Tomé and PríncipeIn distress 9/14/2018
    Sierra LeoneHighHigh2/1/2019
    Solomon IslandsModerateModerate 12/11/2018
    Timor-LesteLowLow6/3/2019
    TogoModerate 10/1/2018
    TuvaluHighHigh 10/1/2018
  • Assessments of fiscal and debt sustainability tend to focus primarily on central governments. In the meantime, a significant proportion of public sector transactions by subnational governments remain excluded.

    While there is increasing consensus over what constitutes a sustainable path for fiscal policy at the central government level, there is a lack of agreement on an approach for assessing subnational fiscal and debt sustainability. Vast differences between and within countries suggest that no single standard subnational fiscal and debt framework may be sufficiently robust to accommodate to all subnational fiscal structures. Such a framework should be customizable and flexible enough to accurately reflect the institutional and policy specificities of the government being analyzed. Benchmarks or indicators of sustainability at the subnational level should be developed on a case-by-case basis, reflecting some guidelines that are relevant to the government in question. 

    The World Bank is active in several areas related to subnational debt and fiscal sustainability. These activities range from research on related topics, the development and practical application of models and analytical tools for the assessment of fiscal and debt sustainability, and courses aimed at training World Bank staff and country authorities in the use of related tools and methodologies.

    Resources:

    Subnational Debt Finance and the Global Financial Crisis

    Managing Subnational Fiscal Risks and Debt Sustainability

    Regulatory Framework for Sub-National Borrowing