ESCAP EGM Daniel Munevar [email protected] Disclaimer: This is a draft presentation...
Transcript of ESCAP EGM Daniel Munevar [email protected] Disclaimer: This is a draft presentation...
Debt Sustainability and the
Sustainable Development
GoalsESCAP EGM
Daniel MunevarUNCTAD
Key message• Debt Sustainability Analysis (DSA) is a useful tool for short term
financial planning. However, it presents limitations as a tool forthe design of long term development policies (SDG agenda).• In a standard DSA, fiscal concerns take precedence over SDGs.
In many cases, it effectively means sacrificing their active pursuit.• Need to redefine debt sustainability, not as a goal per se, but
relative to the development goals to be achieved.• Need to reassess Public Financial Management (PFM) tools:
integrate SDG planning not as an afterthought but as corecomponent of PFM.
What is a Debt Sustainability Analysis?• Debt Sustainability Analysis:
• Standardized framework designed to assess the risks of debt distress, takingaccount of a country’s capacity to carry debt and its projected debt burdenunder both baseline projections and shock scenarios.
Baseline Macroeconomic
Scenario
Public revenues & expenditures
Debt stock & structure
Financing options
Fiscal Analysis Projected evolution of debt
How we frame a problem matters (I)• DSA provides a framework to asses combinations of fiscal policy that
are consistent with debt sustainability (i.e. expenditure ceilings).• As analysis focuses on requirements to achieve debt sustainability,
SDG requirements fall out of sight.• IMF (2018) on debt financing and the SDGs:
• “For countries with low-to-moderate debt burdens and relativelyfavorable debt servicing profiles, the focus should be onmaintaining debt sustainability”
• Current framework potentially locks countries on low debt, lowinvestment scenarios (UNCTAD, 2016).
How we frame a problem matters (II)• An alternative framework:
• UN Secretary General Report (2005)• Debt sustainability is defined as “the level of debt that allows a country to achieve
the Millennium Development Goals and reach 2015 without an increase in debtratios”.
• Need to focus on SDGs as a starting point of analysis.Assessment of conditions required to meet debt sustainability inthis context.
• UNCTAD DSA SDG assessment tool.
An alternative DSA frameworkDSA
FocusDebt Sustainability
Model outputBudget balance consistent with debt
sustainability
UNCTAD DSA SDG
FocusSDGs & Debt Sustainability
Model output
Evolution of expenditure composition
Evolution of domestic mobilization of resources
Conditions and volumes of external transfers
SDGs included in the modelSDGCrosscutting
issues
SDGInfrastructure
SDGSocialCompact
• 17 goals, 169 targets and 227 indicators• Only 88 have an agreed definition
and data are available• Challenges
• Lack of an integrated assessment• SDG modelled individually /
differences in assumptions• Lack of economy wide assesments
• Cross cutting issues• Input co-dependency
• Breakdown of public and private funding
Country sample selection• Based on regional & income group diversity: 2 per region, per
income groupIncome Level Region Country
Low Income Sub-Saharan Africa Ethiopia
Tanzania
Lower Middle Income Latin America Bolivia
Nicaragua
Sub-Saharan Africa Kenya
Cameroon
Asia Vietnam
Cambodia
Upper Middle Income Middle East & North Africa Algeria
Latin America Ecuador
Asia Thailand
SDG Investments & Debt Sustainability
0
5
10
15
20
25
30
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
%ofG
DP
CambodiaExpenditures(%ofGDP)
PrimaryExpendituresSDG PrimaryExpenditures
19
20
21
22
23
24
25
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
%ofG
DP
ThailandExpenditures(%ofGDP)
PrimaryExpendituresSDG PrimaryExpenditures
Source: UNCTAD - Preliminary estimations
SDG Investments & Debt Sustainability
Source: UNCTAD - Preliminary estimations
79.567.1
20.532.9
2016 2030
ParticipationinTotalExpen
diture
PrimaryExpenditure SDGExpenditure
71.5 68.1
28.5 31.9
2016 2030
ParticipationinTotalExpen
diture
PrimaryExpenditure SDGExpenditure
CambodiaComposition General Government Expenditures
ThailandComposition General Government Expenditures
SDG Investments & Debt Sustainability
Source: UNCTAD - Preliminary estimations
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
%ofG
DP
Cambodia- DSAScenarios
BaselineScenario SDGScenario
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
%ofG
DP
Thailand- DSAScenarios
BaselineScenario SDGScenario
Domestic mobilization of resources & Debt Sustainability
Source: UNCTAD - Preliminary estimations
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
%ofG
DP
Thailand- GovernmentRevenues(%ofGDP)
RevenueDMR(%ofGDP) Revenues(%GDP)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
%ofG
DP
Cambodia- Revenues(%ofGDP)
RevenueDMR(%ofGDP) Revenues(%GDP)
Domestic mobilization of resources & Debt Sustainability
Source: UNCTAD - Preliminary estimations
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030%ofG
DP
Thailand- DSAScenarios
BaselineScenario SDGScenario SDGDMR
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
%ofG
DP
Cambodia- DSAScenarios
BaselineScenario SDGScenario SDGDMR
Financing for development & Debt Sustainability
Source: UNCTAD - Preliminary estimations
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
%ofG
DP
Cambodia- DSAScenarios
BaselineScenario SDGScenario SDGDMRConcesional SDGDMRGrant
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030%ofG
DP
Thailand- DSAScenarios
BaselineScenario SDGScenario SDGDMRConcesional SDGDMRGrant
Financing for development & Debt Sustainability
Source: UNCTAD - Preliminary estimations
Estimated transfers required to achieve SDGs & debt sustainability
Policy implications and future research agenda
Source: UNCTAD - Preliminary estimations
• Policy tools, such as the DSA, must provide policy makers with a comprehensive overview of the implications of the SDG agenda. • Alternative DSA framework:
• Integrate in a single platform fiscal and financial analysis. • Promote ownership of the SDG agenda: targets for domestic mobilization
of resources and budget composition. • Improved allocation of scarce development aid funds • Strengthen partnership for the SDGs
• Ongoing research agenda: • External debt DSA• Investment growth - nexus • ECLAC partnership – Climate change and debt sustainability in the
Caribbean
Thank you!
Comments or questions:[email protected]
Disclaimer:Thisisadraftpresentationbasedonongoingresearch.Anyviews
expressedinthispresentationarethoseofthepresenterandnotnecessarilythose
ofUNCTAD