Two of the SIDS—Suriname and Antigua and Barbuda—are assessed as having unsustainable public debt. Both countries have accumulated substantial external debt arrears (they are in default). Restoration of debt sustainability requires agreements with creditors to restructure the debt and reduce the debt burden; Suriname is currently negotiating with its creditors to do this. For these two countries, therefore, some form of substantial debt alleviation is imperative.

All other SIDS are assessed as having sustainable public debt. Two countries, São Tomé and Príncipe and Grenada, are assessed as being in debt distress because they have unresolved debt arrears to external creditors. However, these arrears are unresolved for legal and technical reasons rather than a lack of fiscal resources to repay them, and the current debt metrics of both countries are not markedly worse than those of many SIDS which are not in debt distress. The baseline projections of public debt trajectories in the DSAs for both countries indicate that the key sustainability metrics decline over the medium to long term and can be brought back below the applicable sustainability thresholds. Hence it is possible that both countries can resolve their public debt problems without debt relief.

Fourteen SIDS are assessed as being at high risk of debt distress. These countries differ very widely in respect of their current public debt metrics. Some have high levels of public debt, some moderate levels, and some low levels. Out of the 12, for which present value data are available in the DSA, only five currently breach the applicable sustainability threshold for the Public and Publicly Guaranteed (PPG) debt-to-GDP and only two breach the sustainability threshold for external PPG debt to GDP.

There are three main reasons given in the DSAs for these countries to be assessed as at high risk of debt distress (for some countries more than one reason is cited):

- i) For three countries, current high levels of public debt do not decline fast enough in the baseline projections leading to prolonged breaches of debt sustainability thresholds;

- ii) For four countries, public debt ratios which are currently quite low are projected to rise sharply over the medium to long term because of the need for external finance for SDGs and adaptation investments and, in two of these countries, the expected expiry of grant programs from a bilateral donor;

- iii) For seven countries, vulnerability to shocks (natural disasters, macroeconomic shocks, and the materialization of contingent fiscal liabilities) is the main source of risk to debt sustainability.

In addition to the countries assessed as being at high risk of debt distress, a further three countries are assessed as being at “substantial,” “elevated” or “significant” risk. In all three countries, the main reasons cited for the risk assessment are high or elevated public debt levels together with vulnerability to macroeconomic shocks and/or natural disasters. Nine SIDS are assessed as being at moderate risk of debt distress, one each is assessed as being subject to “increasing” and “decreasing” risks and one is simply assessed as being sustainable without any qualifying term about the level of risk.

What conclusions can we draw about the scale and nature of the public debt problem in SIDS? First, with two exceptions, the public debt of SIDS is not assessed as unsustainable in their latest DSAs. Second, SIDS as a group do not have higher levels of public debt as a share of GDP than other categories of EMDEs. The average level of general government debt among all 19