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On May 1, 2020, the Executive Board approved an RFI (US643 million, 67.3 percent of quota), to support the urgent needs of the Ecuadorean economy in the wake of COVID-19 crisis, and the authorities cancelled the three-year Extended Fund Facility arrangement (US4.2 billion, 435 percent of quota). The macroeconomic situation has since deteriorated, prompting the authorities to request a 27-month EFF of SDR 4.615 billion (about US6.5 billion, 661 percent of quota), to help restore macroeconomic stability, support the most vulnerable groups, and advance the structural reform agenda initiated under the previous EFF.

Debt service. --- Prices.

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This report of the Debt Sustainability Analysis (DSA) indicates that the envisaged strategy of a partial substitution of domestic debt by increased inflows of external grants and concessional loans, as well as a rescheduling of external debt by the Paris and London Clubs, would facilitate the achievement of debt sustainability. The DSA also confirms that such a debt rescheduling could constitute an appropriate exit strategy for Kenya. The DSA also shows that debt sustainability would improve significantly with a concessional rescheduling, particularly under the Naples terms.

Exports and Imports --- Public Finance --- International Lending and Debt Problems --- Debt --- Debt Management --- Sovereign Debt --- International economics --- Public finance & taxation --- Public debt --- External debt --- Debt service --- Debt service ratios --- Arrears --- Debts, External --- Debts, Public --- Kenya

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This paper quantitatively assesses the effects of inflation shocks on the public debt-to-GDP ratio in 19 advanced economies using simulation and estimation approaches. The simulations based on the debt dynamics equation and estimations of impulse responses by local projections both suggest that a 1 percentage point shock to the inflation rate reduces the debt-to-GDP ratio by about 0.5 to 1 percentage points. The results also suggest that the impact is larger and more persistent when the debt maturity is longer, but the difference from the benchmark case is not significant. These results imply that modestly higher inflation, even if accompanied by some financial repression, could reduce the public debt burden only marginally in many advanced economies.

Advanced Economies --- Debt Markets --- Debt Service Burden --- Finance and Financial Sector Development --- Financial Repression --- Inflation --- Macroeconomics and Economic Growth --- Public Debt --- Public Sector Development

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Many countries among the Baltics, Russia and other CIS states are increasingly borrowing on international capital markets, a development that generally reflects their success in achieving financial stabilization. In view of the low level of domestic saving and large capital requirements, recourse to foreign borrowing may of course generate significant benefits for these economies in transition. However, the rapid increase in external debt suggests that consideration also needs to be given to the risks from too high a dependence on foreign saving, including inter alia risk of the postponement of needed structural reforms.

Exports and Imports --- Public Finance --- International Lending and Debt Problems --- Debt --- Debt Management --- Sovereign Debt --- International Investment --- Long-term Capital Movements --- International economics --- Public finance & taxation --- Finance --- External debt --- Debt service --- Public debt --- Foreign direct investment --- Debt service payments --- Balance of payments --- Debts, External --- Debts, Public --- Investments, Foreign --- Russian Federation

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The paper analyzes the factors that contribute to the re-access of countries that emerge from a severe financial crisis to the international capital markets. It conjectures that these factors depend on a sovereign's commitment and ability to repay its foreign debt, signaled by sound macroeconomic policies, and the global liquidity environment. Using panel data for 49 countries over a 24-year period, the analysis uses a simple probit approach to show that, indeed, a sustainable debt profile and a sound external position, accompanied by a favorable global liquidity environment, are key factors in affecting the likelihood a sovereign reaccesses international capital markets.

Exports and Imports --- Finance: General --- Financial Risk Management --- Financial Crises --- International Lending and Debt Problems --- General Financial Markets: General (includes Measurement and Data) --- Portfolio Choice --- Investment Decisions --- Economic & financial crises & disasters --- Finance --- International economics --- Financial crises --- International capital markets --- International liquidity --- Debt service --- Debt service ratios --- Capital market --- International finance --- United States