AN EXPLORATION INTO THE DEBT RELIEF LAFFER CURVE FROM THE PERSPECTIVE OF PUBLIC DEBT SUSTAINABILITY ANALYSIS

Greece posed the greatest challenge among the program countries, while Cyprus, linked to Greece through the banking system and debt restructuring, was the smallest of the country programs. The second Greek program was accompanied by substantial debt relief, but the process of granting it exposed sharp disagreements within the regime complex for crisis finance. The IMF and some euro-area member states advocated private-sector involvement, but split on the sustainability of the remaining official claims on Greece, with the Fund using its debt sustainability analysis as leverage. The case of Cyprus demonstrates that the IMF can be influential even if it contributes a relatively small share of the financing, when it is backed by key creditor states. In both cases, despite substantive conflict, key European creditors adhered faithfully to including the IMF and mediated among the institutions when they became deadlocked.

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Modernizing the Framework for Fiscal Policy and Public Debt Sustainability Analysis

Policy Papers ◽

10.5089/9781498338639.007 ◽

2011 ◽

Vol 2011 (34) ◽

Cited By ~ 8

Author(s):

Keyword(s):

Fiscal Policy ◽

Public Debt ◽

Market Access ◽

Debt Sustainability ◽

Sustainability Analysis ◽

Advanced Economies

Modernizing the framework for fiscal policy and public debt sustainability analysis (DSA) has become necessary, particularly in light of the recent crisis and rising sustainability concerns in some advanced economies. While recognizing the inherently challenging nature of such analysis, this paper highlights areas where improvements are needed and makes both general and specific proposals on how this could be achieved. It also proposes to move to a risk-based approach to DSAs for all market-access countries, where the depth and extent of analysis would be commensurate with concerns regarding sustainability, while a reasonable level of standardization would be maintained.

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Staff Guidance Note for Public Debt Sustainability Analysis in Market-Access Countries

Policy Papers ◽

10.5089/9781498341844.007 ◽

2013 ◽

Vol 2013 (40) ◽

Cited By ~ 18

Author(s):

Keyword(s):

Fiscal Policy ◽

Public Debt ◽

Market Access ◽

Executive Board ◽

Debt Sustainability ◽

Guidance Note ◽

Sustainability Analysis ◽

Advanced Economies

The framework for fiscal policy and public debt sustainability analysis (DSA) in market-access countries (MACs) was reviewed by the Executive Board in August 2011.1 The review responded to shortcomings in identifying fiscal vulnerabilities and assessing risks to debt sustainability against the backdrop of increased concerns over fiscal policy and public debt sustainability in many advanced economies.

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Public Debt and Low-Interest Rates: Evidence from the Case of Morocco

Financial Markets Institutions and Risks ◽

10.21272/fmir.4(2).98-107.2020 ◽

2020 ◽

Vol 4 (2) ◽

pp. 98-107

Author(s):

Hassane Eddassi

Keyword(s):

Growth Rate ◽

Interest Rate ◽

Public Debt ◽

Financial Stability ◽

Debt Sustainability ◽

Sustainability Analysis ◽

Starting Point ◽

The Government ◽

The Interest Rate ◽

The Impact

Public debt is a critical topic in modern economic literature. The necessity for massive public investments and economic reforms encouraged countries to solicit important amounts of debt from the international market. The accumulation of high levels of public debt impacts the fiscal equilibrium in countries and affects the ability of the government to meet its responsibilities. Debt Sustainability Analysis is an approach to investigate the capacity of a country to service its debt without the need to incur major fiscal costs (increasing taxes or reducing expenses). The sustainability of the debt is closely related to the interest rate and the growth rate of the GDP. It can be measured by the debt to GDP ratio. This paper investigates the debt sustainability in the case of Morocco. The paper tries to analyze the impact of the interest rate-growth rate differential on the path of the public debt in Morocco. The particularity of this analysis is the use of the Tax Adjusted Interest rate, instead of the regular interest rate. Using the adjusted rate allows for the ability to take into account the tax collected by the government on T-bills which provides a more accurate determination of the cost of the debt. The paper shows, with empirical evidence, that the sustainability of the debt can be insured when the growth rate is higher than the Tax Adjusted Interest rate, even in the absence of a balance surplus. Countries can meet their debt service requirements without severe fiscal measures under two requirements: a high growth rate and a low-interest rate. The conclusions of the paper constitute a source of information for policymakers, researchers, experts, and practitioners in the field of public debt. This study provides them with the required knowledge to manage public debt, make it more sustainable, and maintain financial stability. This study can also be a starting point for researchers desiring to analyze the efficient repartition of public debt among the economic sectors to ensure strong economic growth. Keywords: Debt Dynamic, Debt Sustainability Analysis, Fiscal Balance, Interest Rate-Growth Rate Differential, Public Debt, Stata, Tax Adjusted Interest rate, Treasury Bonds.

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