Debt Sustainability Strategies that Secure Stability
An assessment of the economic prospects of individual and regional economies needs to be focused on the macroeconomic stability and the ability of the country/region to sustain foreign liabilities (debt) over time. The analysis of the macroeconomic conditions, particularly monetary, exchange-rate and fiscal policies, provides the elements to determine the quality and consistency of policies, and the possible existence of fundamental imbalances. In turn, the study of public and external debt in the context of a multiyear framework helps determine the capacity of an economy/region to have a realistic growth path over time.
In this regard, the Centennial Group is eminently qualified to provide the right balance of global, regional and country analysis. Its wide ranging experience on broad macro-developments at an international level is illustrated by the contributions of the firm and its analysts to the evaluation of many different countries/regions, and the discussion of these issues in different fora, including the prestigious and well established Emerging Markets Forum.
The analysis of country risk under this practice is based on well-established methodologies that the Centennial Group is very well versed in. The methodology applied in the country analyses is in line with the work followed by the IMF and the World Bank. Centennial also uses propriety models developed in-house (Debt Sustainability Assessment (DSA) and Financial Programming Exercise (FPE) models).
The Financial Programming Exercise provides consistency in the analysis of the real, monetary, fiscal and external sectors and their interactions – as initially developed by the IMF. Overall, a financial program warrants the internal consistency of a comprehensive set of macroeconomic policies aimed at achieving the objectives of macroeconomic stability and sustainable growth. The short-run objectives and policies are framed in the context of a country’s medium-term program.
The purpose of debt sustainability analysis (DSA) is to assess whether a country’s current debt level and prospective borrowing (i.e., its prospective fiscal policy) are sustainable under a number of risk scenarios. Put differently, it assesses the country’s ability to service its debt in the future. Based on the IMF/WB framework, Centennial has developed a revised methodology, which has been integrated with the Financial Programming Exercise described earlier, to provide consistency in the analysis of individual country macroeconomic policies and outlook.
Our Macroeconomic and Debt Sustainability Expertise
We take a holistic approach to global debt sustainability strategies, with services including:
- Assessment of economic outlook and risks in Emerging Economies, at individual country and regional level.
- Forecasts of how monetary, fiscal, and other policies will develop, based on our internal methodology, and available publications.
- Assessment of Debt Sustainability Prospects over the medium term, under varying scenarios.
- Studies of macroeconomic and sectorial policies required to achieve the long-term macro-economic policy goals for an individual country or region.
Typical Macroeconomic and Debt Sustainability Assignments
Centennial Group has regularly produced a number of products in this area, including:
- Some 30 individual country assessments in Africa, Asia, Europe, Middle East and Latin America, for a Risk Assessment Unit for a major Official Donor.
- In depth reports on individual country prospects in the short and medium term, with a strong policy perspective, at the request of individual private clients, or country authorities.
- Regional Studies identifying the macroeconomic and sectorial policies needed to achieve long-term goals for a specific region (Latin America, Africa, Central Asia), consistent with the prospects of the global economy.
Meet the principal(s) that lead our Macroeconomic and Debt Sustainability assignments:
Director of Centennial Group and Chief Executive Officer of Centennial Group Latin America
Director of Centennial Group and Centennial Group Latin America