Jubilee USA partnered with Friedrich-Ebert-Stiftung New York to publish the Practice of Sovereign Debt Sustainability Analysis, by Joseph E. Stiglitz and Martin Guzman.

The paper was the fourth to launch as part of a series that gathered practitioners to write on the theme "Debt Sustainability Assessments and their Role in the Global Financial Architecture." The papers will be chapters in a report to appear later in the summer. 

Practice of Sovereign Debt Sustainability Analysis, by Joseph E. Stiglitz and Martin Guzman

Debt Sustainability Analyses (DSAs) are documents that hold serious implications for both debtors and creditors in sovereign debt negotiations. DSAs are not merely technical assessments of countries’ capacity to take on debt but are also grounded in political assumptions. A new study by Martín Guzmán and Joseph E. Stiglitz looks at the practice of the IMF’s debt sustainability analysis. They discuss how incentives and competing interests of stakeholders shape understandings of the debt sustainability constraints, endogenous effects of macroeconomics and fiscal policies, and beliefs on distribution of shocks. They identify areas for improvements in DSAs opportunity and publication timelines, dealing with the IMF’s role as a creditor, the treatment of foreign vs domestic currency debt, choosing correct discount factors, and the causes of over-optimism in baseline growth scenarios. 

Find the webpage for the "Debt Sustainability Assessments and their Role in the Global Financial Architecture" series here.