Debt Sustainability

This paper assesses the various definitions and mechanisms used to achieve debt sustainability. Section 2 examines the basis for the definition of sustainability currently used by the international community to determine debt relief levels and monitor long-term sustainability. Section 3 examines the different methods used to assess sustainability, using equations, models and thresholds. Section 4 looks at the application of definitions and thresholds to attain debt sustainability for developing countries, by using them as guidelines for providing debt relief and concessional new financing, and for deciding debtor country policies.