Baghdassarian, WilliamPradelli, JuanMele, Gianluca2014-12-032014-12-032014-11https://hdl.handle.net/10986/20628This work presents a stochastic framework for assessing public debt sustainability and applies it to the case of Mauritania. The sustainability assessment projects solvency and liquidity indicators -- public debt stock and gross financing needs relative to GDP -- for 2014-23. The analysis uses deterministic scenarios and stochastic simulations to analyze policy options and fiscal risks. The study relies on simple econometric models to generate forecasts of key macroeconomic variables driving the public debt dynamics and to compute debt-distress probabilities and debt thresholds. The study builds on basic techniques to determine optimal portfolios suitable as benchmarks for public debt management. A main result is that, if Mauritania maintains a strong growth performance and pursues sound policies to balance the budget and take advantage of concessional financing opportunities, it could reduce the public debt from 74 percent of GDP in 2013 to 30 percent by 2023, and the gross financing needs from 12 percent of GDP to 4 percent. Further scaling up capital spending is likely to deteriorate public debt sustainability because the estimated (marginal) growth-dividend is small. A more promising avenue would be to improve the quality of public investment and institutions, as opposed to the volume of capital expenditure. Different debt strategies can significantly affect the liquidity needs and the on-budget interest bill. But it is the fiscal policy geared toward balanced budgets that ultimately would permit Mauritania to improve the solvency indicators, and thus the public debt sustainability.en-USCC BY 3.0 IGOALTERNATIVE INVESTMENTAMORTIZATIONAMORTIZATIONSARREARSAUTOMATIC STABILIZERSBANK DEPOSITSBANK POLICYBASELINE SCENARIOBASIC SERVICESBONDSBORROWING COSTSBORROWING STRATEGIESBUDGET BALANCEBUDGET DEFICITBUDGET DEFICITSBUDGET LAWBUSINESS CYCLEBUSINESS CYCLESCAPITAL EXPENDITURECAPITAL EXPENDITURESCAPITAL PROJECTSCAPITAL SPENDINGCASH BALANCESCASH TRANSFERSCENTRAL BANKCENTRAL GOVERNMENTCIVIL SERVANTSCOMMODITY PRICESCREDIT SPREADSCREDITORSCURRENCYCURRENCY DEPRECIATIONCURRENCY RISKCYCLICAL FACTORSDEBT DATADEBT DYNAMICSDEBT ISSUANCEDEBT LEVELSDEBT MANAGEMENT POLICIESDEBT OBLIGATIONSDEBT POLICIESDEBT PROJECTIONSDEBT RATIODEBT REDUCTIONDEBT RELIEFDEBT REPAYMENTDEBT SERVICEDEBT STOCKSDEBT SUSTAINABILITYDEBTSDEFICIT FINANCINGDEMAND FOR FUNDSDEVELOPING COUNTRIESDOMESTIC BORROWINGDOMESTIC DEBTDOMESTIC INTEREST RATESDOMESTIC MARKETDOMESTIC REVENUEECONOMIC DEVELOPMENTECONOMIC DOWNTURNECONOMIC GROWTHEMERGING MARKETSEXCHANGE RATEEXCHANGE RATESEXPENDITUREEXPENDITURE PRIORITIESEXPENDITURESEXTERNAL BORROWINGEXTERNAL DEBTEXTERNAL GRANTSEXTERNAL SHOCKSFINANCIAL ASSETSFINANCIAL COSTSFINANCIAL INSTITUTIONSFINANCIAL INSTRUMENTSFINANCIAL LIABILITIESFINANCIAL MANAGEMENTFINANCIAL MARKETSFINANCIAL OBLIGATIONSFISCAL CONSOLIDATIONFISCAL DEFICITFISCAL DISCIPLINEFISCAL FRAMEWORKFISCAL MANAGEMENTFISCAL PERFORMANCEFISCAL POLICIESFISCAL POLICYFISCAL POLICY FRAMEWORKFISCAL PRUDENCEFISCAL REVENUEFISCAL RISKSFISCAL VULNERABILITYFLOATING INTEREST RATESFLOATING RATEFOREIGN CURRENCIESFOREIGN CURRENCYFOREIGN CURRENCY RISKFOREIGN DEBTFOREIGN EXCHANGEFOREIGN LOANSGOVERNMENT BUDGETGOVERNMENT DEBTGOVERNMENT DEPOSITSGOVERNMENT POLICIESGOVERNMENT REVENUEGOVERNMENT SECURITIESGOVERNMENT SECURITIES MARKETGRACE PERIODGROSS PUBLIC DEBTGROWTH RATEHIGHER INTERESTHIGHER INTEREST RATESHUMAN DEVELOPMENTINDEBTEDNESSINFLATIONINFLATION RATEINFLATION RATESINFRASTRUCTURE PROJECTSINSTRUMENTINTEREST COSTINTEREST EXPENDITUREINTEREST PAYMENTINTEREST PAYMENTSINTEREST RATE RISKINTERNATIONAL BANKINTERNATIONAL DEVELOPMENTINTERNATIONAL INVESTORSINVESTMENT EXPENDITUREINVESTMENT POLICIESINVESTMENT POLICYINVESTMENT PROJECTSINVESTMENT SPENDINGINVESTMENT STRATEGIESISSUANCEISSUANCESLABOR MARKETLENDERSLEVEL OF DEBTLEVEL OF RISKLIABILITYLIQUID ASSETSLIQUIDITYLIQUIDITY RISKSLOANLOAN CONTRACTSLOAN MARKETLOCAL BANKSLOCAL CURRENCYMACROECONOMIC ENVIRONMENTMACROECONOMIC PROJECTIONSMACROECONOMIC RISKMACROECONOMIC STABILITYMACROECONOMIC UNCERTAINTIESMACROECONOMIC UNCERTAINTYMACROECONOMIC VARIABLESMACROECONOMIC VOLATILITYMARKET CONSTRAINTSMARKET FOR GOVERNMENT SECURITIESMATURITIESMATURITYMINISTRY OF FINANCEMONETARY FUNDMONETARY POLICYNATURAL RESOURCESNEGATIVE VALUESNET BORROWINGNET PUBLIC DEBTOIL RESERVESOUTSTANDING STOCKSPOLICY DECISIONSPOLITICAL ECONOMYPORTFOLIOPORTFOLIO ALLOCATIONPORTFOLIO ALLOCATIONSPORTFOLIOSPRINCIPAL PAYMENTSPROGRAMSPUBLIC CAPITALPUBLIC DEBTPUBLIC DEBT INSTRUMENTSPUBLIC DEBT MANAGEMENTPUBLIC DEBT MANAGERSPUBLIC DEBT STOCKPUBLIC FINANCESPUBLIC FINANCIAL MANAGEMENTPUBLIC INVESTMENTPUBLIC INVESTMENT SPENDINGPUBLIC SPENDINGREAL EXCHANGE RATEREAL INTERESTREAL INTEREST RATEREPAYMENTREPAYMENT CAPACITYRESERVERETURNREVENUE SOURCESRISK MANAGEMENTRISK PROFILESANITATIONSECURITY MARKETSHORT MATURITIESSHORT-TERM GOVERNMENT SECURITIESSOLVENCYSOVEREIGN DEBTSOVEREIGN LIABILITYSUSTAINABILITY ANALYSIST-BILLST-BONDT-BONDSTAXTAX BASESTAX REVENUESTOTAL EXPENDITURETOTAL PUBLIC EXPENDITUREVALUATION10.1596/1813-9450-7088