term analysis have already a high level of debt vulnerability based on the most recent available IMF/World Bank debt-sustainability analysis and only 4 of them have a level of debt vulnerability currently assessed to be low.

The proposed medium-term metric is based on four elements: (1) a debt ratio projected to reach 50 percent of GDP in 2023, the year when all BRI debt financing is expected to be fully disbursed; (2) a level of BRI financing at least equal to 5 percent of GDP (close to the median BRI debt financing); (3) an estimated growth rate which is not sufficient to fully offset the increase in PPG debt due to BRI; and (4) a fiscal stance not adequate to stabilize the PPG debt-to-GDP ratio inclusive of BRI.

The results heavily depend on a number of key assumptions. First, due to lack of sufficient information on debt financing related to BRI investment projects, the paper uses information obtained from news sources and World Bank country teams to estimate BRI debt financing from the estimated cost of BRI investment, which is identified as planned or under construction from 2016 to 2018. Second, it is assumed that the terms of debt financing equal the terms of Chinese loans reported by debtor countries to the World Bank through the _Debtor Reporting System_ . Third, two extreme assumptions are made with respect to projected PPG debt, GDP and primary balances as reported in the October 2018 WEO: i) that WEO projections fully incorporate the impact of BRI or ii) that WEO projections do not include any impact from BRI. Based on this three sets of assumptions the paper estimates the growth and fiscal gaps related to BRI investments.

This proposed methodology helps to identify countries that can be expected to face a rapid deterioration in debt sustainability despite very limited information on BRI investment. Estimates of growth apply the World Bank LTGM and regression techniques adequate for dynamic panels with endogeneity issues. Thanks to these estimates, the paper has estimated the marginal impact on growth that would derive from BRI infrastructure investment and used these estimates to project indebtedness ratios, assuming that BRI investment would be completed by 2023. The exercise helped identify those countries that, despite higher growth, would experience an increase in their level of indebtedness because of BRI investment. These growth estimates can be used in country-specific assessments, if there are no alternative estimates.

Turning to model-driven long-term simulations, the assumption of a negative interest-growth differential generates long-term growth projections with limited effect of BRI on debt vulnerabilities in a large number of BRI countries. Simulations have used the result of an SGE model as in de Soyres et al. (2019), to account for the full effect of trade-related infrastructure, policy reforms and externalities on growth. Simulations compared debt dynamics with respect to a scenario in which no BRI investment would take place and growth, primary balance and interest rate would be equal to their long-term historical averages. Debt dynamics are mainly driven by long-term drivers and BRI investment would generally result in lower indebtedness in most countries and would require adjustment to limit the build-up of debt vulnerabilities in only a handful of countries.

Fiscal risks associated with BRI are expected to be sizeable. Depending on the contract management structure and the clauses of the contracts, BRI investment is likely to also increase exposure of government budgets to risks deriving from direct and contingent liabilities, availability payments, and termination clauses. According to the literature, megaprojects (infrastructure projects costing US$ 1 billion or more) are very likely to go overbudget, miss deadlines, and not deliver on revenue, growth and employment expectations, thus leaving a heavy bill to be paid by governments. Among BRI-recipient 34