IMF Introduces a New Approach to Assessing Debt Sustainability

The International Monetary Fund has said it is launching a new approach to assessing debt sustainability for countries that are able to access financial markets with the goal of predicting the risks of financial crises more accurately and improving transparency.

Fund officials said that it is expected to activate an update of the debt evaluation methodology, the first since 2013, the year after a European sovereign debt crisis, in the last quarter of this year or the first quarter of 2022.

These evaluations are important because they help determine how much money a country can borrow while still meeting the Fund’s stringent requirements not to slide debt into the unsustainable mode. For example, the IMF remains reluctant to grant Lebanon a bailout program until the country’s existing debt is put on a sustainable path, among other factors.