# **Table 11. Primary Balance Bounds Test**

## **Bound Test 3: Primary Balance Shock**

(In percent of GDP, unless otherwise indicated)

||**Actual**|||**Project**|**ions**||||
|---|---|---|---|---|---|---|---|---|
||2005|2006|2007|2008|2009|2010|2011||
|||||||||**Debt-stabilizing**<br>|
|**I. Baseline Medium-Term**|**Projections**|||||||**primary**|
|||||||||**deficit**|
|Public sector debt 1/|61.2|**60.1**|**61.1**|**57.1**|**52.8**|**48.2**|**43.4**||
|o/w foreign-currency denominated (net)|17.1|17.9|18.8|18.0|17.9|17.9|18.1||
|o/w foreign-currency denominated (gross)|22.7|23.2|23.9|22.9|22.6|22.3|22.2||
|<br>o/w domestic debt (net) 3/|44.1|42.2|42.3|39.1|34.8|30.3|25.3||
|Change in public sector debt|-2.0|-1.2|1.0|-4.0|-4.3|-4.6|-4.9|0.0|
|Identified debt-creating flows (4+7+12)|-1.7|-1.2|1.0|-4.0|-4.3|-4.6|-4.9|0.0|
|Primary deficit|-6.5|-0.6|-0.6|-6.5|-6.5|-6.5|-6.5|**-1.4**|
|Revenue and grants|67.2|66.0|65.3|65.3|65.3|65.3|65.3||
|<br>Primary (noninterest) expenditure|60.7|65.4|64.7|58.8|58.8|58.8|58.8||
|<br>Seigniorage|-0.6|-0.7|-0.6|-0.6|-0.6|-0.6|-0.6|-0.6|
|Automatic debt dynamics 2/|5.5|0.6|2.7|3.1|2.8|2.6|2.3|2.0|
|Contribution from interest rate/growth differential|4.5|0.7|2.7|3.2|3.0|2.7|2.5|2.2|
|Of which contribution from real interest rate|7.4|3.7|5.6|6.1|5.7|5.2|4.8|4.2|
|Contribution from domestic real interest rate 4/|6.2|2.1|3.9|4.4|4.0|3.6|3.1|2.6|
|Contribution from real interest rate on foreign debt 5/|1.6|1.7|1.8|1.9|1.8|1.8|1.7|1.7|
|Contribution from real interest rate on net foreign assets 6/<br>|-0.4<br>|-0.1<br>|-0.1<br>|-0.1<br>|-0.1<br>|-0.1<br>|-0.1<br>|-0.1<br>|
|Of which contribution from real GDP growth|-2.9|-2.9|-2.9|-2.9|-2.7|-2.5|-2.3|-2.1|
|Contribution from real exchange rate depreciation 7/|0.9|-0.2|-0.1|-0.1|-0.1|-0.1|-0.2|-0.2|
|<br>Other identified debt-creating flows|0.0|-0.4|-0.4|0.0|0.0|0.0|0.0|0.0|
|Privatization receipts (negative)|0.0|-0.4|-0.4|0.0|0.0|0.0|0.0|0.0|
|Recognition of implicit or contingent liabilities|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|Other (specify, e.g. bank recapitalization)|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|<br>Residual, including asset changes (2-3)|-0.3|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|Public debt in percent of revenues 1/|91.1|91.1|93.6|87.4|80.8|73.8|66.4||
|Primary deficit that stabilizes the debt-to-GDP ratio|-4.5|0.6|-1.6|-2.5|-2.2|-2.0|-1.7|-1.4|
|Required deficit reduction|-2.0|-1.2|1.0|-4.0|-4.3|-4.6|-4.9|-5.1|
|**Gross financing**5/|36.9|31.1|32.4|24.6|21.6|18.5|15.0||
|in billions of U.S. dollars|128.9|113.5|127.1|104.0|98.9|91.2|80.6||
|||||||||For debt|
|**Key macroeconomic and fiscal assumptions**||||||||stabilization|
|Real GDP growth (in percent)|4.8|5.0|5.0|5.0|5.0|5.0|5.0|5.0|
|Average nominal interest rate on public debt (percent) 6/|15.9|11.0|13.2|13.1|13.1|12.9|12.8||
|Average nominal interest rate on public domestic debt (in percent) 11/|22.0|11.3|14.6|14.6|14.6|14.6|14.6|14.6|
|Average interest rate on foreign-currrency denominated debt|10.3|10.4|10.9|10.9|10.9|10.9|10.9|10.9|
|<br>Average nominal interest rate on NFA (in percent) 12/||5.0|5.0|5.0|5.0|5.0|5.0|5.0|
|<br>Average real interest rate (nominal rate minus change in GDP deflator, percent)|9.1|5.0|8.7|9.7|9.6|9.4|9.3||
|<br>Change in the real exchange rate (Local currency per US dollar) 13/|5.1|-1.0|-0.5|-0.4|-0.8|-0.8|-1.0|-1.0|
|<br>Nominal depreciation of local currency (LC per dollar)|9.3|2.5|1.4|0.5|0.2|0.2|0.0||
|Exchange rate (US dollar per LC)|0.0|0.0|0.0|0.0|0.0|0.0|0.0||
|Nominal appreciation of local currency (increase in US dollar value of local currency)|-8.5|-2.4|-1.4|-0.5|-0.2|-0.2|0.0||
|<br>Inflation rate (in percent)|6.8|6.0|4.5|3.5|3.5|3.5|3.5|3.5|
|US Inflation rate (in percent)|2.7|2.4|2.5|2.5|2.5|2.5|2.5|2.5|
|Growth of real primary spending (deflated by GDP deflator, in percent)|5.9|13.0|3.9|-4.6|5.0|5.0|5.0||
|Base Money (percent of GDP)|7.8|7.7|7.7|7.7|7.7|7.7|7.7||

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