Benchmarking Dynamically Stable Public Debt Trajectories for Low-Income Countries

Plamen Iossifov, Ali Abbas and Lennart Niermann

No 2026/075, IMF Working Papers from International Monetary Fund

Abstract: In this paper, we develop two complementary approaches for benchmarking the public debt trajectories of Low-Income Countries (LICs) to assess their dynamic stability. We compare the evolution of the overall public debt-to-GDP ratios of reference LICs with the historical experiences of other countries with similar characteristics, which are now further down the path of economic development and have not experienced public debt stress events. We rely on both direct comparison and a novel application of the synthetic control method (SCM). These public debt trajectories that are dynamically stable from a historical perspective can provide insights into debt sustainability analyses for LICs.

Keywords: Dynamic Stability; Debt Sustainability; Synthetic Control Method; Low-Income Countries; public debt trajectory; IMF working papers; public debt-to-GDP ratio; scm robustness; ratios of Reference lics; Debt sustainability analysis; Fiscal stance; Global (search for similar items in EconPapers)
Pages: 33
Date: 2026-04-10
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