A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative

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...

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Main Authors:	Bandiera, Luca, Tsiropoulos, Vasileios
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	DEBT FINANCE FISCAL SUSTAINABILITY FISCAL RISK INFRASTRUCTURE INVESTMENT BELT AND ROAD INITIATIVE
Online Access:	http://documents.worldbank.org/curated/en/723671560782662349/A-Framework-to-Assess-Debt-Sustainability-and-Fiscal-Risks-under-the-Belt-and-Road-Initiative http://hdl.handle.net/10986/31904

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spelling	okr-10986-319042022-09-20T00:12:41Z A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative Bandiera, Luca Tsiropoulos, Vasileios DEBT FINANCE FISCAL SUSTAINABILITY FISCAL RISK INFRASTRUCTURE INVESTMENT BELT AND ROAD INITIATIVE 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). 2019-06-19T16:23:59Z 2019-06-19T16:23:59Z 2019-06 Working Paper http://documents.worldbank.org/curated/en/723671560782662349/A-Framework-to-Assess-Debt-Sustainability-and-Fiscal-Risks-under-the-Belt-and-Road-Initiative http://hdl.handle.net/10986/31904 English Policy Research Working Paper;No. 8891 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper East Asia and Pacific Middle East and North Africa South Asia Central Asia East Asia Middle East South Asia China
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	DEBT FINANCE FISCAL SUSTAINABILITY FISCAL RISK INFRASTRUCTURE INVESTMENT BELT AND ROAD INITIATIVE
spellingShingle	DEBT FINANCE FISCAL SUSTAINABILITY FISCAL RISK INFRASTRUCTURE INVESTMENT BELT AND ROAD INITIATIVE Bandiera, Luca Tsiropoulos, Vasileios A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative
geographic_facet	East Asia and Pacific Middle East and North Africa South Asia Central Asia East Asia Middle East South Asia China
relation	Policy Research Working Paper;No. 8891
description	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).
format	Working Paper
author	Bandiera, Luca Tsiropoulos, Vasileios
author_facet	Bandiera, Luca Tsiropoulos, Vasileios
author_sort	Bandiera, Luca
title	A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative
title_short	A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative
title_full	A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative
title_fullStr	A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative
title_full_unstemmed	A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative
title_sort	framework to assess debt sustainability and fiscal risks under the belt and road initiative
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/723671560782662349/A-Framework-to-Assess-Debt-Sustainability-and-Fiscal-Risks-under-the-Belt-and-Road-Initiative http://hdl.handle.net/10986/31904
_version_	1764475333169381376

A Framework to Assess Debt Sustainability and Fiscal Risks under the Belt and Road Initiative

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