The Federated States of Micronesia - Joint World Bank-IMF Debt Sustainability Analysis
The Federated States of Micronesia (FSM) remains at high risk of debt distress under the Debt Sustainability Framework (DSF). Unless the compact agreement with the United States or parts of it are renewed, the FSM will face a fiscal cliff when the...
| Main Authors: | , |
|---|---|
| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/540981570790742527/The-Federated-States-of-Micronesia-Joint-World-Bank-IMF-Debt-Sustainability-Analysis-September-2019 http://hdl.handle.net/10986/32573 |
| id |
okr-10986-32573 |
|---|---|
| recordtype |
oai_dc |
| spelling |
okr-10986-325732021-05-25T09:28:47Z The Federated States of Micronesia - Joint World Bank-IMF Debt Sustainability Analysis World Bank International Monetary Fund PUBLIC SECTOR DEBT DEBT DISTRESS CONTINGENT LIABILITY DEBT SERVICE BURDEN PUBLIC AND PUBLICLY GUARANTEED DEBT EXTERNAL DEBT SUSTAINABILITY ANALYSIS RISK ASSESSMENT MACROECONOMIC MANAGEMENT The Federated States of Micronesia (FSM) remains at high risk of debt distress under the Debt Sustainability Framework (DSF). Unless the compact agreement with the United States or parts of it are renewed, the FSM will face a fiscal cliff when the U.S. Compact grants amounting to 20 percent of gross domestic product (GDP) are expected to expire in FY2023. Under the baseline scenario without fiscal adjustments, the fiscal cliff would put debt on an upward trajectory starting in FY2024, with the external debt-to-GDP ratio reaching 30 percent in FY2029 and 57 percent in FY2039, and the public debt-to-GDP ratio reaching 43 percent in FY2029 and 67 percent in FY2039. As a result, the DSF thresholds on the present value of external debt-to-GDP and public debt-to-GDP ratios are projected to be breached within a 20-year horizon. While mechanical application of the DSF based on a 10-year forecast horizon would imply a moderate risk rating, the envisaged breach of the thresholds within a 20-year forecast horizon would warrant an assessment of high risk of external and overall debt distress. Lowering the risk of debt distress would require a fiscal adjustment and steadfast structural reforms to promote private sector growth. The FSM’s vulnerability to climate change and weather-related natural disasters constitutes a major risk and calls for strategies to strengthen climate change resilience 2019-10-17T20:10:17Z 2019-10-17T20:10:17Z 2019-09-30 Report http://documents.worldbank.org/curated/en/540981570790742527/The-Federated-States-of-Micronesia-Joint-World-Bank-IMF-Debt-Sustainability-Analysis-September-2019 http://hdl.handle.net/10986/32573 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work Economic & Sector Work :: Debt and Creditworthiness Study East Asia and Pacific Micronesia, Federated States of |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
PUBLIC SECTOR DEBT DEBT DISTRESS CONTINGENT LIABILITY DEBT SERVICE BURDEN PUBLIC AND PUBLICLY GUARANTEED DEBT EXTERNAL DEBT SUSTAINABILITY ANALYSIS RISK ASSESSMENT MACROECONOMIC MANAGEMENT |
| spellingShingle |
PUBLIC SECTOR DEBT DEBT DISTRESS CONTINGENT LIABILITY DEBT SERVICE BURDEN PUBLIC AND PUBLICLY GUARANTEED DEBT EXTERNAL DEBT SUSTAINABILITY ANALYSIS RISK ASSESSMENT MACROECONOMIC MANAGEMENT World Bank International Monetary Fund The Federated States of Micronesia - Joint World Bank-IMF Debt Sustainability Analysis |
| geographic_facet |
East Asia and Pacific Micronesia, Federated States of |
| description |
The Federated States of Micronesia (FSM)
remains at high risk of debt distress under the Debt
Sustainability Framework (DSF). Unless the compact agreement
with the United States or parts of it are renewed, the FSM
will face a fiscal cliff when the U.S. Compact grants
amounting to 20 percent of gross domestic product (GDP) are
expected to expire in FY2023. Under the baseline scenario
without fiscal adjustments, the fiscal cliff would put debt
on an upward trajectory starting in FY2024, with the
external debt-to-GDP ratio reaching 30 percent in FY2029 and
57 percent in FY2039, and the public debt-to-GDP ratio
reaching 43 percent in FY2029 and 67 percent in FY2039. As a
result, the DSF thresholds on the present value of external
debt-to-GDP and public debt-to-GDP ratios are projected to
be breached within a 20-year horizon. While mechanical
application of the DSF based on a 10-year forecast horizon
would imply a moderate risk rating, the envisaged breach of
the thresholds within a 20-year forecast horizon would
warrant an assessment of high risk of external and overall
debt distress. Lowering the risk of debt distress would
require a fiscal adjustment and steadfast structural reforms
to promote private sector growth. The FSM’s vulnerability to
climate change and weather-related natural disasters
constitutes a major risk and calls for strategies to
strengthen climate change resilience |
| format |
Report |
| author |
World Bank International Monetary Fund |
| author_facet |
World Bank International Monetary Fund |
| author_sort |
World Bank |
| title |
The Federated States of Micronesia - Joint World Bank-IMF Debt Sustainability Analysis |
| title_short |
The Federated States of Micronesia - Joint World Bank-IMF Debt Sustainability Analysis |
| title_full |
The Federated States of Micronesia - Joint World Bank-IMF Debt Sustainability Analysis |
| title_fullStr |
The Federated States of Micronesia - Joint World Bank-IMF Debt Sustainability Analysis |
| title_full_unstemmed |
The Federated States of Micronesia - Joint World Bank-IMF Debt Sustainability Analysis |
| title_sort |
federated states of micronesia - joint world bank-imf debt sustainability analysis |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/540981570790742527/The-Federated-States-of-Micronesia-Joint-World-Bank-IMF-Debt-Sustainability-Analysis-September-2019 http://hdl.handle.net/10986/32573 |
| _version_ |
1764476835430662144 |