Question:
In the context of International Monetary Fund’s debt restructuring process, what is meant by ‘Debt Sustainability Analysis’ (DSA)?
(1) An analysis to determine the amount of debt a country can sustain without defaulting.
(2) An assessment of a country’s ability to meet its current foreign debt obligation.
(3) A method to decrease the interest payments on existing debt.
(4) An analysis of the long-term ability of a country to service its debt.
(5) An analysis of full repayment of all outstanding debt within five years.
Correct Answer:
(-1) or (-4)
Answer Explanation:
A Debt Sustainability Analysis (DSA) is a formal framework used by the IMF to evaluate a country’s capacity to finance its policy objectives and service its debt obligations over the long term without requiring unfeasibly large adjustments to its balance of payments or fiscal policy.
Topic: Global Economy Year: 2024
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