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Stavros Zenios and Andrea Consiglio

Articles by Stavros Zenios and Andrea Consiglio

Incorporating political risks into debt sustainability analysis

January 22, 2020

DSA applies to crisis countries only, but an early warning system identifying vulnerabilities is relevant for all countries. A more general, less stringent, debt vulnerabilities analysis (DVA) could be used to assess countries’ debt management policies and identify vulnerabilities, without leading immediately to policy consequences.When lenders such as the International Monetary Fund or the European Stability Mechanism want to assess whether a country meets the criteria for receiving international assistance, they carry out a debt sustainability analysis (DSA). This involves debt simulations and scenarios that evaluate the likelihood of countries meeting their future obligations. The Greek debt crisis, however, exposed the drawbacks of traditional debt sustainability analysis. During

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