Publication: A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative
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Date
2019-06
ISSN
Published
2019-06
Author(s)
Bandiera, Luca
Tsiropoulos, Vasileios
Abstract
This paper provides a framework to
assess the impact of infrastructure investment expected
under the Belt and Road Initiative (BRI) on the debt
vulnerabilities of countries that are located on BRI
transport and connectivity corridors in the absence of
comprehensive and consistent information on investments and
financing terms. Key assumptions relate to the amount of
public and publicly guaranteed (PPG) debt financing and its
terms, the size and sectoral type of identified BRI
investment, and the expected impact of growth in the medium
and long term of that investment. BRI debt financing is
expected significantly increase PPG debt in a number of
countries. The paper provides estimates for both the medium
and the long term. In the medium term, defined as the period
2019-2023, debt financing of BRI investment is expected to
be fully disbursed while the full growth impact of BRI
related infrastructure is not entirely realized. In this
initial phase, around one-third of assessed BRI-recipient
countries are estimated to face elevated debt
vulnerabilities post- BRI, several of which have already
high debt vulnerabilities. The impact of BRI on public debt
would improve over the longer term under the assumption of a
sustained negative interest rate-growth differential and in
the absence of the materialization of BRI related fiscal
risks. Still, debt to GDP ratio is expected to remain higher
in one-third of countries (11 out of 30 with available data).
Link to Data Set
Citation
“Bandiera, Luca; Tsiropoulos, Vasileios. 2019. A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative. Policy Research Working Paper;No. 8891. © World Bank, Washington, DC. http://hdl.handle.net/10986/31904 License: CC BY 3.0 IGO.”
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