Presbitero, Andrea F. and Arnone, Marco (2006): External debt sustainability and domestic debt in Heavily Indebted Poor Countries.
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In this paper we stress the limits of the current debt sustainability framework used in the IMF-WB HIPC Initiative and the necessity to include domestic public debt into the analysis. The standard sustainability analysis does not take into account the fully-fledged budget constraint and the feedback effects of the fiscal and monetary adjustment required by multilateral programs. The switch from foreign to domestic borrowing, and rising domestic real interest rates are likely to undermine the overall sustainability and the success of debt relief programs. This work focuses on the evaluation of public debt sustainability in a simple accounting framework. We use data on external public debt (multilateral and bilateral) and on domestic public debt to underline how the inclusion of domestic debt into the analysis undermines the sustainability target.
|Item Type:||MPRA Paper|
|Institution:||Economic Growth: Institutional and Social Dynamics. Working Papers Series|
|Original Title:||External debt sustainability and domestic debt in Heavily Indebted Poor Countries|
|Keywords:||HIPC; Domestic debt; Debt sustainability; Debt Relief|
|Subjects:||O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O19 - International Linkages to Development; Role of International Organizations
H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt; Debt Management; Sovereign Debt
F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems
|Depositing User:||Andrea Filippo Presbitero|
|Date Deposited:||09. Jan 2007|
|Last Modified:||18. Feb 2013 22:53|
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