Analyzing Debt Sustainability: Concepts and Tools Applied for Guinea, Rwanda,and Senegal

Bernhard Gunter () and Quentin Wodon

MPRA Paper from University Library of Munich, Germany

Abstract: A sustainable debt is a precondition for sustainable development. Yet the analysis of a country’s debt sustainability is a complex task given issues related to (1) establishing the actual debt outstanding and future debt-service obligations; (2) defining appropriate sustainability indicators; and (3) projecting future macroeconomic variables like gross domestic product, exports, interest rates, inflation rates, and exchange rates. These projections are crucial because debt sustainability analysis is necessarily forward-looking and highly sensitive to changes in these macroeconomic variables. This paper provides a case study of debt sustainability analysis in three African countries to illustrate the key concepts and complexities involved in such analysis. We begin with an overview of the main debt sustainability indicators as they typically are used in practice. We then provide a brief historical review of previous and current debt relief initiatives and illustrate how they have been applied in each of the three countries. The paper then presents the debt sustainability analyses using a recently developed simulation tool (SimSIP Debt).

Keywords: Debt sustainability; macroeconomic projections; debt relief (search for similar items in EconPapers)
JEL-codes: E62 F34 H63 (search for similar items in EconPapers)
Date: 2008-01
New Economics Papers: this item is included in nep-mac
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Published in Public Finance for Poverty Reduction: Concepts and Case Studies from Africa and Latin America (edited by Blanca Moreno-Dodson and Quentin Wodon, published in World Bank Directions in Development) (2008): pp. 311-344

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