contingent debt to hedge against some risks such as government debt indexed to GDP, exports, or export commodity prices. However, the hedging potential of these instruments has not yet been fully realized.

# _Improving the efficiency of spending_

A large share of the resources owed to private creditors and non-Paris Club governments is devoted to infrastructure financing —especially, among Sub-Saharan African countries. In the context of infrastructure financing, public debt will be sustainable if the stream of revenues generated by the infrastructure project under finance is sufficient to repay the debt.

In the context of financing infrastructure, the policy discussion should also stress policy actions that improve investment management among countries in the region —that is, enhance those institutions that ensure the effective use of public resources. Choosing a quality investment project (with an output multiplier greater than one) depends on the government identifying a pipeline of good projects and that it has the solid institutional framework to support the phases of planning, allocation, and implementation of public infrastructure investment programs. For instance, infrastructure project delays may lead to considerable carry costs for not using the proceeds (implementation risks). In sum, the quality of investments is key to improve the project’s returns.<sup>15</sup> The public investment multiplier can then be enhanced by implementing policies that foster the efficiency of public investment. Evidence shows that improving the institutions and procedures governing project appraisal, selection, and monitoring can render considerable economic dividends. The public investment multiplier could double if the gap between the bottom and top performers in public investment efficiency is closed (IMF 2015). Finally, a reduced amount of public investment is not a cause of concern as long as it reflects improved efficiency of spending, improved public procurement, reduced red tape and corruption, among others. With reduced budgets, the government may also try to crowd-in private investment. When combined with better commitment to regulation, rising private investment in infrastructure will improve access, affordability, quality of infrastructure and enhance public savings (World Bank 2017).

# _Moving from debt management to balance-sheet management_<sup>_16_</sup>

The standard fiscal sustainability analysis has typically focused on flows (say, revenues, expenditures and balances) with an assessment of stocks that are primarily restricted to gross debt positions. Focusing solely on debt misses a wide array of government activity. Broadening the scope of analysis from public debt to public wealth may shed light on the assets that the government controls and non-debt liabilities —e.g. pensions. An assessment of the public-sector

> 15 There is evidence that government investment in low-income countries crowds in private investment: an additional dollar of government investment leads to two additional dollars of private investment, and 1.5 additional dollars on output in the subsequent period (Eden and Kraay 2014).

> 16 This discussion draws heavily from IMF (2018).

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