SPECIAL REPORT - DEVELOPMENTS IN COMMONWEALTH DEBT SINCE THE GLOBAL FINANCIAL CRISIS

For example, the European Union and Eastern Caribbean Currency Union use debt stock to GDP of 60%; CEMAC and WAEMU regions use stock to GDP of 70%; the East African Community uses 50% present value of Debt to GDP; and the IMF/World Bank LIC debt sustainability analysis framework uses a range of 35-70% present value to GDP (varying based on the strength of country debt management capacity). [...] This section of the report therefore identifies countries which currently have high debt burdens, using two methods: 1) the IMF/World Bank assessment of a country’s level of debt distress risk (limited to the 27 countries for which such assessments are made); and 2) countries with the highest levels of debt/GDP and debt service/revenue based on data collected from a broader range of sources. [...] The second key factor pushing up debt and especially debt service levels since the financial crisis has been a change in the key debt financing sources available to countries, and in their financial conditions and debt service costs. [...] Most of the Commonwealth SIDS in the Caribbean, and many in the Pacific, have been hit by such disasters since 2008, resulting in debt increases ranging from 5% to 30% of GDP in the years following the disasters as the countries need to fund reconstruction and absorb lower growth. [...] • as judged by the IMF and World Bank Low Income Country Debt Sustainability Analyses, 52% (and rising) of Commonwealth low and lower-middle income countries are at high risk of debt distress or in debt distress, higher than the overall global total of 42%; and • as judged by a broader picture of total public debt burdens, 25 countries have high debt stock levels, and 21 have high debt service/rev.