Joint MEFMI/IMF/World Bank Training on Debt Sustainability Analysis for Low Income Countries

BACKGROUND

Debt vulnerabilities in low-income countries have risen sharply over the last decade, exacerbated by the impact of the COVID-19 shock and Russia-Ukraine war (IMF, 2023). Many developing countries adopted national development strategies that relied heavily on external financing and debt accumulation. These led to the build-up of significant debt levels, gross financing needs and, consequently, debt vulnerabilities and economic pressures. In addition, countries are faced with a complex creditor landscape, increasing cost of debt and adverse macroeconomic conditions, among others. Therefore, it is critical for developing countries to conduct debt sustainability analysis (DSA) regularly to inform policy decisions to help them reduce the current debt burdens through economic reforms, lowering the cost of financing and the debt reorganisation processes. MEFMI will offer the regional training on DSA for low-income countries to build the capacity of officials in member countries to address the debt and related challenges and inform debt management policy decisions.

OBJECTIVE

The objective of this course is to impart knowledge and develop skills of participants on the use of the IMF/ World Bank revised Debt Sustainability Frameworks for Low Income Countries (LIC DSF) to conduct a DSA.

CONTENT

The course will cover the following topics:

1. Introduction to Debt Sustainability;

2. Macroeconomic Linkages and Debt dynamics;

3. Inputs into the Revised DSF for Low Income Countries;

4. Realism Tools in the DSF;

5. Stress Tests and Shock Scenarios;

6. Debt Carrying Capacity and Thresholds;

7. Risk Signals in the DSF;

8. Use of Judgement in DSA; and

9. Final Risk Ratings in the DSF.

TARGET GROUP

The course targets middle level officials responsible for middle office functions of debt management in Ministries of Economy, Finance, Economic Planning and Development, and Central Banks. The following member countries are eligible to attend this course: Kenya, Lesotho, Malawi, Mozambique, Rwanda, Tanzania, Uganda, Zambia and Zimbabwe.