metadata: authors: 0: author: Bandiera,Luca
1: author: Budina,Nina Todorova
2: author: Klijn,Michel
3: author: Van Wijnbergen,Sweder
count: World
docna: 0: docna: The "how to" of fiscal
            sustainability : a technical manual for using the fiscal
            sustainability tool
docty: Policy Research Working Paper
subtopic: Macro-Fiscal Policy,Economic Adjustment and Lending,Public Sector Economics,State Owned Enterprise Reform,Public Sector Administrative & Civil
            Service Reform,Inflation,Privatization,Energy Privatization,Public Finance Decentralization and
            Poverty Reduction,Democratic Government,Economics and Finance of Public
            Institution Development,Public Sector Administrative and Civil
            Service Reform,De Facto Governments
teratopic: Macroeconomics and Economic Growth,Public Sector Development,Finance and Financial Sector Development,International Economics and Trade
abstracts: cdata!: Fiscal sustainability analysis (FSA) is
            an important component of macroeconomic analysis for many
            developing countries. To further enhance understanding of
            fiscal policy and the constraints faced by policymakers, the
            authors develop a toolkit for FSA in middle-income countries
            which builds on previous  work in this area and on new
            developments in dealing with uncertainty. The FSA toolkit
            includes an Excel-based FSA tool and a technical manual
            accompanying it. The FSA tool is standardized and simple,
            but at the same time flexible enough to allow for
            user-defined country-specifics. This manual provides
            step-by-step technical instructions for running the FSA tool
            and includes mathematical appendices and a glossary.
repnme: repnme: The "how to" of fiscal
            sustainability : a technical manual for using the fiscal
            sustainability tool
display_title: The "how to" of fiscal
            sustainability : a technical manual for using the fiscal
            sustainability tool
listing_relative_url: /research/2007/03/7459520/fiscal-sustainability-technical-manual-using-fiscal-sustainability-tool
topicv3: Inflation m1326709 0870F4727ACED1CF8525815C00471347,Fiscal Sustainability m1326901 1097,Fiscal Policy m1327144 445,Contingent Liabilities m1327145 1145,Privatization m1327236 1283
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: Macroeconomics and Economic Growth,Public Sector Development,Finance and Financial Sector Development,International Economics and Trade
no_of_pages: 71
author_keys: 0: author_key: 717637
1: author_key: 427961
2: author_key: 904631
3: author_key: 165690
model_extractions: WPS4170

# **The "How to" of Fiscal Sustainability**

**A Technical Manual for Using the Fiscal Sustainability Tool**<sup>**1**</sup>

Luca Bandiera, Nina Budina, Michel Klijn and Sweder van Wijnbergen<sup>2</sup>

## **Abstract**

Fiscal sustainability analysis is an important component of macroeconomic analysis for many developing countries. To further enhance understanding of fiscal policy and the constraints faced by policy makers, we develop a toolkit for fiscal sustainability analysis (FSA) in middle-income countries, which builds on previous work in this area and on new developments in dealing with uncertainty. The FSA toolkit includes an excel-based FSA tool and a technical manual accompanying it. The FSA tool is standardized and simple, but at the same time flexible enough to allow for user-defined country specifics. This manual provides step-by-step technical instructions for running the FSA tool, and includes mathematical appendices and a glossary.

## World Bank Policy Research Working Paper 4170, March 2007

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._

> 1 A companion background paper, published as WPS 4169 surveys various FS approaches that have been incorporated in the FS tool and presents an application of this tool for Turkey.

> 2 First and second author: World Bank, Washington DC, USA, third author: HEAS BV, Netherlands, fourth author: University of Amsterdam, Netherlands.
|**Table of Contents**|
|---|
|1.<br>Structure of the Fiscal Sustainability Tool.................................................................................... 4|
|<br>2.<br>The Instruction Sheet.................................................................................................................... 5|
|2.1<br>Configuring the FS tool: the Options Menu ......................................................................6|
|2.2<br>Importing new data: Import Data menu.............................................................................7|
|2.3.<br>The Stochastic Simulations menu......................................................................................9|
|3.<br>The Input Sheet........................................................................................................................... 13|
|4.<br>The Seigniorage Sheet and Steady State Fiscal Consistency Approach (as in Anand and van|
|Wijnbergen) ........................................................................................................................................ 19|
|5.<br>The Base Case Scenario Sheet.................................................................................................... 22|
|5.1.<br>Dynamic Forward-Looking Debt Simulation..................................................................22|
|5.2.<br>Dynamic Consistency Measure........................................................................................23|
|5.3.<br>Additional Outputs...........................................................................................................23|
|5.4.<br>Oil Rich Country Base Case Scenario Sheet ...................................................................26|
|<br>6.<br>The Alternative Scenario Sheets................................................................................................. 29|
|7.<br>The Bounds Test Sheets.............................................................................................................. 40|
|8.<br>Summary of Output..................................................................................................................... 48|
|References........................................................................................................................................... 51|
|Glossary .............................................................................................................................................. 53|
|Appendix A.1: Derivation of Public Debt Decomposition Dynamics................................................ 66|
|A.1.1<br>Set of Variables............................................................................................................... 66|
|A.1.2<br>Public Debt Decomposition Equation............................................................................. 67|
|A.1.3<br>Public Debt Decomposition in Oil Rich Countries......................................................... 68|
|<br>A.1.4<br>Inflation and seigniorage formulas ................................................................................. 70|
|Appendix A.2 Multivariate Stochastic Simulations............................................................................ 71|
|Tables|
|Table 1. Component of the change in public net debt to GDP ratio....................................................23|
|<br>Table 2. Output of the sheet “Table_SR” ............................................................................................25|
|Table 3. Component of the change in public net debt to GDP ratio for ORC.....................................27|
|Table 4. Output of the Sheet “TableSROil”.....................................................................................28|
|__<br>Table 5. “A1_historical” sheet.............................................................................................................30|
|Table 6. Output Table of the Alternative Scenario..............................................................................35|
|Table 7. Output Table of the No Policy Change Scenario...................................................................37|
|Table 8. Output Table of the Low Oil Price Scenario .........................................................................39|
|<br>Table 9. Real Interest Rate Bound Test. ..............................................................................................42|
|Table 10. Real GDP Bound Test..........................................................................................................43|
|Table 11. Primary Balance Bound Test...............................................................................................44|
|Table 12. Combined Bound Test .........................................................................................................45|
|Table 13. Nominal Exchange Rate Depreciation.................................................................................46|
|Table 14. Contingent Liabilities Shock ...............................................................................................47|

2
# <u>Figures</u>

|Figure 1. A Stylized Presentation of the FS Tool for MICs ..................................................................4|
|---|
|Figure 2. Input Sheet: Baseline............................................................................................................14|
|Figure 3. Input Sheet: Oil Revenues and Prices ..................................................................................16|
|Figure 4. Seigniorage Sheet.................................................................................................................20|
|Figure 5. Required Deficit Reduction..................................................................................................21|
|Figure 6. Inflation Maximizing Seigniorage........................................................................................21|
|Figure 7. Macroeconomic and Debt Data Input for the Alternative Scenario.....................................31|
|Figure 8. Assumptions for the Alternative Scenario............................................................................32|
|Figure 9: Oil Revenues and Prices.......................................................................................................32|
|Figure 10. External Debt Management for the Alternative Scenario ..................................................33|
|Figure 11. Input Sheet for No Policy-Change Scenario ......................................................................36|
|Figure 12. Input Sheet for Market Forecast Scenario..........................................................................38|
|Figure 13. Representation of Alternative Scenarios and Bound Tests ................................................48|
|Figure 14. Debt Ratios and Gross Financing Needs............................................................................49|
|Figure 15. Stochastic Simulations of Net Public Debt and Required Deficit Reduction ....................50|

3
# **1. Structure of the Fiscal Sustainability Tool**

This manual gives a technical description and instruction for running the Fiscal Sustainability Analysis (FSA) template. First, it presents all the model blocks. Second, it lists all the data requirements to implement the model. Third, it gives detailed instructions on how to run the model and how to perform stochastic simulations and various stress tests. Finally, this note also gives some guidance on how to read output tables and graphs.

**Figure 1. A Stylized Presentation of the FSA Template for MICs**

<!-- Start of picture text --> Instruction Sheet<br>2. Country settings 1. Country characteristics: 3. Features of the analysis<br>a. Country selections a. Oil-rich/Non Oil a. Fiscal reaction function<br>b. Period of analysis b. Net/gross domestic b. Stochastic simulations<br>c. Data imports debt<br>Input sheet<br>1. Data Inputs for baseline net debt<br>decomposition<br>2. Additional assumptions for<br>alternative scenarios<br>Steady state consistency Dynamic simulations<br>1. Seigniorage revenue and base 1. Baseline debt decomposition<br>money projections 2. Alternative scenarios<br>2. Required deficit reduction 3. Bounds tests<br>4. Stochastic simulations<br>Stochastic simulations Scenario analysis<br>1) Debt ratios 1) Debt ratios<br>2) Required deficit 2) Required deficit reduction<br>reduction 3) Gross financing needs<br>Output Output Output<br>1) Seigniorage chart Fan charts of: 1. Table baseline, Alternative<br>2) Required deficit 1) Public debt Scenarios and Bounds Tests<br>reduction chart 2) Required deficit 2. Table Gross fin. needs<br>reduction 3. Summary graphs<br><!-- End of picture text --> 4
FSA template V1.00 Turkey . Defintion of domestic debt: Net Historical period: 1994/2005 Projection period: 2006/2011 <!-- Start of picture text --> Options<br>Import+t DaData<br>Run Stoch sim<br><!-- End of picture text --> <!-- Start of picture text --> sheet control<br>Visible sheets Hidden sheets<br>uy Ese a] >> | B7_Revenue<br>SE 7<br>StochSim |<br>Table_SR.<br>Table_GF.<br>A1_historical.<br>A2_npc.<br>A3_alternative. +]<br>I Enable oil rich country functions<br><!-- End of picture text -->
<!-- Start of picture text --> O Options i<br>Import Data<br>Eun Stech sim<br><!-- End of picture text --> <!-- Start of picture text --> options x!<br>Workbook settings<br>country MESTICO +|<br>Defintion of domestic debt {~ Gross f* met<br>First year of Projection 2006<br>Fiscal reaction function OF |<br><!-- End of picture text -->
<!-- Start of picture text --> ( _ Sistem |<br>Import Dat<br>Eun Stech sim<br><!-- End of picture text -->

<!-- Start of picture text --> Ore year of projection: [ next |<br><!-- End of picture text -->

<!-- Start of picture text --> x<br>| browse |<br>© Connect to Live data base<br>f manual input (not recommended’ ok |<br><!-- End of picture text -->
<!-- Start of picture text --> x<br>Zoeken in: je LDB 7| @-f vel ® (Sy Es) + extrar<br>ie4 Ss)3] | ]ARGLDE. BRALDB. xlsXLS<br>Onlangs 1]L0B_FORM.#LS<br>eee 3) MEXLDB.XLS<br>= 2 )PHLLDE.<br>Co 4) POLLDE.XLSxL5<br>Bureaublad G2 THALDB12.xL5<br>, 1)TURLDB.<br>2} VENLDB-52104.xls<br>a) xls<br>Mili<br>documenten<br>a Dee<br>a,Mijn Bestandsnaam: nn 2 | OK |<br>netwerklocaties Bestandstype: [excel LDB files (*.xls} x]<br><!-- End of picture text -->

<!-- Start of picture text --> is this the correct file? > | Jed<br>ee]»)> TheCADocumentsLOB excel andfile you Settings,4dministrator|Desktop\LOBiTURLDE,selected is: xls<br>DateStamp: 1-6-2006<br>Containing the following information:<br>Country: Turkey<br>Refresh date for definitions: 20-12-2005<br>Refresh date for equations: 22-2-2006<br>Refresh date for CETS: 3-1-2005<br><!-- End of picture text -->

<!-- Start of picture text --> LDB query x<br>country | +| go! |<br><!-- End of picture text -->
<!-- Start of picture text --> Microsoft Excel ef<br>There where 3 time codes missing, please check your input-sheet for details<br><!-- End of picture text --> <!-- Start of picture text --> LJ<br><!-- End of picture text --> <!-- Start of picture text --> copy to input sheet |<br><!-- End of picture text -->

<!-- Start of picture text --> Reftesh Data Data |<br><!-- End of picture text -->

# Reftesh Data Data |

<!-- Start of picture text --> Step1:Randomize [><]<br>© ROR psd) ny ala<br>years Jé Realexchangerate = [973170773 | 20.975584368<br>start year 2006 Real domestic rate 10. 00652846; 20, 850371931 -<br>Real foreignintrate = [ 3,362147406. | i.eosa90se4: “9<br>C) Real growth rate 5,000000492% 5,629960193i<br>Mexct | Use matrix |<br><!-- End of picture text -->

<!-- Start of picture text --> Options |<br>Import Data<br>Eun Stoch sim<br><!-- End of picture text -->
<!-- Start of picture text --> Step1:Randomize [x]<br>years j 6 Real exchange rate j “0.731707 735 j 20,97550438<br>start year j 2006 Real domestic rate j 10, 00652846; j 20850371930<br>Number of drawings j 5000 Real foreign int rate j 8.362147406; j 1803390584:<br>Real growth rate 5,000000492% 5,629960193¢<br>Wet | O Use matrix |<br><!-- End of picture text -->

<!-- Start of picture text --> define Covar matrix {x}<br>exchangeh rate domesticinterestrate foreigninterest rate Stowthh rate<br>exchange rate g.0000000 ia] in} 0<br>domestic interest rate o.0000000 0.0000000 oO o<br>fore bon Ierest Lote g.0000000} —_0.0000000 IRNNNTar ener Q<br>CCLth GErat o.coo0000©=8.c000000©~=— 0.000000 err oK<br><!-- End of picture text --> <!-- Start of picture text --> $tep1-Randomize [x]<br>years ( Ez Real exchange rate | -0,731707735 20, 97558438<br>start year 2006 Real domestic rate | 10, 00652846; 20850371931<br>Number of drawings 5000 Real foreign int rate | 8.5621474067 1803300584:<br>O Real growth rate | 5,000000492¢ j 56299601 93t<br>—_ | Use matrix |<br><!-- End of picture text -->
<!-- Start of picture text --> $tep1-Randomize (&)<br>years é Real exchange rate | -0,731707735 20, 97558438<br>start year 2006 Real domestic rate | 10, 00652846; 20850371931<br>Number of drawings 5000 Real foreign int rate | 8.5621474067 1803300584:<br>Real growth rate | 5, 000000492 j 5.629960193%<br>Next | O Use matrix |<br><!-- End of picture text -->

<!-- Start of picture text --> Step?: fan chart creation |<br>Top level chart bloks<br>| ee |<br>Clear List |<br>C) Make Fan chart |<br><!-- End of picture text -->

<!-- Start of picture text -->
>!<br><!-- End of picture text -->

<!-- Start of picture text --> Step?: fan chart creation x|<br>TTop level chart>|bloks O<br>Clear Make Fan chart |<br>List |<br><!-- End of picture text -->
<!-- Start of picture text -->
| 1 | 10000 eHat mu -0,731707735444933 Gmu —_5,00000049284922 1000 eHat mu -0,731707735444933 Gmu —_5,00000049284922<br>| 2 | eHat sigm’20,9755843854759 Gsigma %5,62996019364436 eHat sigm’20,9755843854759 Gsigma 75,62996019364436<br>| 3 | Rtmu —_8,36214740678432 Rmu _10,0065284672488 Rtmu _'8,36214740678432 Rmu _10,0065284672488<br>| 4 | Rt sigma 11,80339058413857 Rsigma /20,8503719304273 Rt sigma /1,80339058413857 Rsigma '20,8503719304273<br>| 6 | 61,2449820052006200 | 15,3683 10,8 7 517, -0,665612008, -7,56967,2009-020-18,6689 41,682 61,244820052021,6 0 90962007,»11,85642 3,5701512008, 443492009, 11,9557,amo,-19,5588<br>| 10 27,7933, 22,88801 26,63335 2624035 30,16613 46,16475 10 20,6895 21,84818 22,10208 22,79591, 22,69054 23,7697<br>| 3 | 25 6,21247 | 7,321371 8102087 8,503806 9,085342| 9,654379 25 6182861 6,98193 7,495622 7,456533 | 8.816783 9,129805<br>| 9 | 30 1390997 19,9106 | 23,77767, 26,72299| 28,74517 30,5849 30 1456948, 20,8172, 2505113, 28,25732| 30,01767 30,5772<br>| 10 | 25 6,497353 10,10516 12,82805 15,84117 18,72061 20,6605 25 6,902439 9,960214 1181195 15,10276 16,81453 21,29457<br>| 1 12| 10 61,24498 | 52 4 ,3803,,1793 4 89 , 9195104186 64 4, 3946 2 93 8 9138027 39,58449| 3444434)116,5923, 29,0037214,0321 10 61,24498 5419 , 170934362, 3349 ,0 41863794 52,10427,44,4623 5539 , 61589|58449 7934 , 16064434 29,037108,00 2<br>| 14)<br>| 16 | Public sector debt Public sector debt<br>| 18 | 200<br>[19<br>| 20) | 200<br>a mn 30 100 mn 30<br>| 26 | 50 —_a _—_____—________ mmmi= 2510 50 mmm= 2510<br>0 = ee =|<br>3] 100 60<br>| 34<br>M4 > il{_B5 Depreciation {B6_CL { Data_chart {Graph Summary) BEMMEaeo Graph Baseline { outputsim { rdrsim {LDBd / | «| |<br><!-- End of picture text -->
# **3. The Input Sheet**

The input sheet includes all the debt, macroeconomic data and assumptions needed to use the template (Figure 2). Parameters and imported or copied data are stored only in the input sheet. If they are needed in another sheet, the values are transferred through formula linkages. Refer to Section 2. The Instruction Sheet for information on how to set parameters and import data. Once "input_fiscal" is filled in correctly, the baseline and stress test results are automatically calibrated and summarized in the output tables in sheets "Table_SR" (debt ratios) and "Table_GF" (gross financing need). If stochastic simulations are enabled the default values of the average and standard deviation of the random variables are defined. If the fiscal reaction function is enabled, the stochastic simulations and all stress tests are consistent with the automatic fiscal rule.

In general, the implementation of this model requires 10 years of historical data as well as 5 years of projections for key macroeconomic indicators that are used in the FS template. However, in environments with sparse data, a shorter period of actual data could be accommodated (e.g. 5 years). Regarding macroeconomic projections, this model can be used in conjunction with a macro projection framework, or alternatively, could be populated using the live data base of the Bank.

The implementation of this model requires projections for all variables listed in below, except for the public debt stock, which is derived from public debt dynamics used in the FSA template. However, since we recognize that for many market access countries foreign borrowing maybe rationed by the markets, we allow the user to enter country-specific assumptions for allowable foreign borrowing, derived from any macroprojection framework. Since the change in public debt is derived from the public debt dynamics equation and the external foreign currency debt path is predetermined, the time path for domestic public debt is derived as a residual.

For all variables the following information is to be provided:

- 1) Unit of measurement: national currency, U.S. dollar, index number in column A

- 2) Scale: billions, millions, percent in column B

- 3) Database: source of data (LDB, GDF, other sources) in column C

- 4) Series Code, in case data are from a database in column D

- 5) Descriptor: eg. “External debt stock”, in column E

- 6) Notes in column F.

Data requirements which need to be filled in the input sheet are divided in 6 main blocks (Figure 2):

- 1) Debt stock and debt service data 2) Fiscal data 3) GDP, prices and exchange rates 4) Monetary data

- 5) Other factors 6) Assumptions for baseline projections

For oil reach countries (ORCs), the FSA tool includes an additional block for oil revenues and prices.

13
<!-- Start of picture text --> EE Microsoft Excel - FSA_tool_presentation_wlurkey_11July. xls (- fe)<br>:3S—_ B<br>iB] Bile Edit View Insert Format Tools Data Window Help Typea question for help + _ Gx<br>teiadega fa) a A) | | Y@; Reply with; Changes... End Review...5 FE Fail Aiy flGe) :Bix| fe4a 2Se | oe2 S|ofa | @ | j | Sh S| oszy<br>;ISB5 eyeS) 34 U)F)¥ 43a& @ BS)$F | w97 |e OE5 ~ Al2h ZlKL | hillty apices|e 5 - OB.<br>5i TimesTi New Roman ~l0 ~|BT U|/EF322SS 44/5 % 3 +.0Si 58.00 || c=3 SFgS | Pee~~ Bib: @- security...F | M3x ke | oo<br>AFS1 hd &<br>A = = =O QO SS « : * | A<br>[1<br>| || unitsCoustr Turkey.fea Databaze,chee Series Code. Descriptor Notes 2004 2005 Firstprojectionsyear of2006 BOOT 2006 2003<br>[4 Debt[NotionalstockCurrency Billions LDB,GF$ ——GE.DOD-TOTLCN General government, gross debt Public sector debt AIZATOSES.6 295,086,7585<br>[6[5[7[8|||[Nat NatNationalNational ional Currency CurrencyCurrency Billions BillionsBillions L LDB,GFSOD B,GFS ——GE.DOD. ——GE.DOD.DNMS.ChFRGM.CNDMEY.Ch of ofwofw domest domestic netqross forc domesticdebtdebt i qn-currencycpublic to to the other debtmonetarydenominatedsystem debe Foreign-currencyNet domestic public denominatddebt BSS,S63,7400187027,100.6SEISLZESS1099.2 212,459,546.5105,dTOSST1 241,827,317.81.2422 ADE SSTS TSI RES ROSES MISS IBS eOe TET 1S<br>[a|U.5. dollars Millions LOE,.BoF | OT.ANT.OPPG.CD Amertiostion on public external debt 7000.1 12,400.0 15,254.8 153644 15.2808 1S ATES<br>[10| National Curreney Billions Amortization on public domestic debt 120,300,000.0 138,400,000.0<br>Notional Currency | Billionz Holding of qovernment securities by the Central Bank 23,284 486.0 614.0<br>Notional Currency Billions LOB, Debt — DT.DOD.DSTC.CD Short-term public sector debt<br>| 14 | Fiscal data<br>(5| National Currency Billions LOB, GPS GE.GALOVRLGN General government balance Public sector balance O506021T -22 125.2084 1252801 = BATA -TOSB,0898 = Td 4d 8,<br>(16| National Currency Billions LOB, GPS GE.XPDUINLD.CH General government, expenditure and net lending Public sector expenditure BI4853 157.0 GHE,050,1T0.5 385,898,578.0 SROSET MES. 424,405,727. 461,222,923. 501<br>Lot(18(48||| NationalNationalNational CurrencyCurrencyCurrency BillionsMillionsBillions = LE,LDE,GF$LOE, GF GF 0 GEMPCINTDLCNGELMPCINTE.CH—GEVREVIGRT.CN GeneralInterestGeneral paymentsgovernmentgovernment,on expenditure,totalforexrevenuedebt domesticand grantsinteract PublicInteractPublic sectorsectorpayments domestic ravenuconforex(andinterd q]d 288,953,195. 48,255,000.0—T730,000.0 $23,820,801943,284,000.010,116,000.0 955,740,77235,825,000.011,372,000.0«12,597,000.0984,055,054.732,208,000.0 417S68,08T.2S5,1S24916128319446 455,57HAT4.935,128,088 13,282,097.5 452,4315,<br>|[22 21 | GDP,National PricesCurrency and ExchaBio n sge rates|LDB,8NA& NY.GDR.METP.CN Gross domestic product, current prices Grose domestic product, cu] ASOS4TSS 451813,760.6 596,058,7245 55,155.2954 ESSN Tors b94,628498.6 Ted,<br>Notional Currency Billions Hon-Oil GDP, current prices 4,854.5 5899.5 6,978.0 7,801.0 8649.1 9485.5<br>Notional Currency Biillione — LOB,SMA—MIY.GOPLMIKTP.AM Grosz domestic product, constant prices Gross demeztic product, co 156,692.68 145,255.8 150 416.5 1TA37.3 165,834.2 4125.8<br>Notional Currency | Billionz Non-Oil GDP, constant pricer Bare year [2000] 156,692.68 145,255.8 150 416.5 1TA37.3 165,834.2 4125.8<br>[26| Notional Curreneyper Mone LOB,Priees PENUSFCAE | MARKET E.CHR A TE,NGEPD. END Exchangerate, national currel 1,336,300.0 1460,000.0 1,496,573.2 151,867.53 US25,2TUS = ASEBAEZE 1<br>National Currency per Mone LDB,Prices PANUS.FCRF Exchange rate, national currency per UL, Dollar Exchange rate, national curre LAeL6ST.T ISTE © 1,465,730.6 44385317 155252 | 1519,903.4<br>Index Number Nene LDB,Priees — FP.CPLTOTL Conzumer Price Index Consumer Price Index 401aeds 428,603.5 454,400.5 ATA BATS 431,043.41 508, 255.8<br>Inelex Number None US Gonsumer Price Index US Consumer Price Index 1087 tet 1154 118.3 wie 124.5<br>MoactargNational Currencydata Billions FALELACUR.CN Fsservs Money BREST OURO | ST RSS<br>National Currency Billions FALELAMON.GN | Currency in ciculation<br>[a4| National Currency Billions FMAST.NIRYACN | Mat foreign assets BOAT ATES REGGE SEG441G T «| SOMEEEST.S © HIGH4TEO SEI OSE 35<br>Other factors<br>[37| National Currency Billions LOB, GF GESOEPRV2.CD Privaticationreceipts [negative] O10 -ASSTETLO «© -RABSETTT «— -B.382,965.4 ao oo<br>National Currency Billion Fiecognition of implicit or contingent liabilities<br>National Currency Billions Other [epecify, ¢.g. bank recapitalization]<br>so | Assumptions for basel<br>Lt | Net Domestic debt 220,166,929. 226,645,925.9 BAB SOTABAS BET.ETE O68 230<br>se | Domestic interest payments 55,025,000.0 52,238,000.0 S5,58.092.5 36,054556.8 59<br>sa | RealAverage domesticMaturity Interest rateof Domest 5.0 Aa<br>M40) 1 Instructions Input_fiscal/ Seigniorage / Tablef Stochsim / Table_sr. /Table_GrF. / £|< ><br>:iDraw> Ls | AutoShapess “. “S []© A]ry fl 27 ig] Fy| &-~ #-i A-SSS SEGom Js<br>Ready NUM<br>—SSSSS<br><!-- End of picture text -->
2) Fiscal data Cell range G15:X19, Fig. 1 Fiscal data refer to the appropriate coverage of the public sector: total revenues and grants, total expenditure, interest expenditure and the overall balance. Interest payments on domestic debt have to be consistent with the adopted definition of domestic debt. See point 7 below for a discussion of how the FSA tool accommodates both a gross or net definition of interest payments on domestic debt.

Data from this block are used to report a liquidity indicator, gross financing needs, which measures how much cash the government has to have in hand to cover all the claims coming due in the current year (data for the past 10 (5) years are calculated in cells G79:X79; the input sheet). The gross financing need in the current year is measured as the sum of the amortization of foreign and domestic public debt coming due during the current year, the interest expenditure, and the primary deficit also for the current year. To calculate this indicator for the projection period, we use the available projections for external public debt and amortization of external debt from LDB or from the existing macroprojection framework. For domestic debt we allow the user to manually insert data for the projected average maturity of domestic debt. The default assumption in this version of the template is that the average maturity of domestic public debt will remain the same as in the base year (cells S54:X54 from the input sheet).

3) GDP, prices and exchange rates Cell range G22:X29, Fig. 1 This section includes data on gross domestic product in current and constant prices; average and end-of-period exchange rates with respect to the U.S. dollar; and domestic and foreign (US) consumer price index (CPI), average for the period. The average exchange rate is used to convert in U.S. dollar the gross financing need of the government and to simulated domestic debt payments in the alternative scenario. End of period exchange rate is used to estimate the contribution to debt dynamics of real exchange rate devaluation and of the real interest rate on foreign debt. By default, the template reports current WEO projections for the U.S. CPI.

**For ORC only** , the template requires the input of non-oil GDP in current and constant market prices.

4) Monetary data Cell range G32:X34, Fig. 1.

Monetary data include base money (defined as Reserve Money and Currency in circulation) and net foreign assets (NFA) of the Central Bank, end-of-period. The template assumes net debt decomposition, as public debt is net of the Central Bank credit to the government and the Central Bank’s holdings of government paper and of NFAs. By default, NFAs are assumed to earn and interest rate equal to the LIBOR rate on the U.S. dollar: LIBOR rates can be retrieved from the _Intarnational Financial Statistics_ or other financial databases.

5) Other factors Cell range G37:X39, Fig. 1.

Other factors refer to any other variable which have a direct impact on debt dynamics, other than the primary fiscal balance, the contribution of interest rate/growth differential and the exchange rate.

15
<!-- Start of picture text --> PB a RT U 5<br>|i [Units Seale Database, Series_Code Descriptor Notes 2004 2005 2006 2007 20 Ge<br>a2 |Countr Nigeria. Oil rich Firstprojections year of eeoe<br>| 4 | Oil revenues and prices ce<br>National Currency Billions nla Met oil revenues 2,899.9 4.3 5,686.7 6044.2 6.304<br>National Currency Billions: tila Reference price-oil revenue Oil revenues at Bi 1814.5 2,385.0 2557.9 3487 3.331<br>National Currency Billions: ta Oil stabilization Furd 1085.3, 1732.4 228.8 2,895.5 2,973<br>Oil prices<br>U.S, dallars Us¢rbbl nia Market prices WEO Average Oil 383 542 605 56.5 bree<br>| 48 | U.S. dollars US ¢ibsHE b lI nind a BaselineAlternative scenario 1 BudegetPrice at minimum prices 25.0 30.0542 3325 .0 30.0255 2 086<br>4a ue<br><!-- End of picture text -->
Cell range E50:X54, Fig. 1.

7) Assumptions for baseline projections This section specifies the assumptions for the real interest rate and maturity structure of domestic debt. The template requires projections for stock, interest payments and amortization on external debt and calculates the implicit nominal and real interest rate and maturity structure of external debt. Similar projections for domestic debt might not be directly available. Therefore, the template allows the user to insert alternative assumptions to calculate the real interest on domestic debt:

- 1) Insert projections for domestic debt stock and interest payments (cells S39:X40). In this case, the implicit nominal interest rate is derived as interest payments in period _t_ divided by domestic debt stock in the period _t-1_ ; The real interest rate is derived deflating the nominal interest rate by the domestic inflation rate;

- 2) Insert projections for the real domestic interest rate (cells S41:X41). In this case the real interest rate is exogenously determined by the user and the nominal interest rate is derived by the template.

To correctly calculate the implicit nominal and real interest rate, the user has to define whether data on domestic debt and domestic interest expenditure are reported on a gross or a net basis (cell E38 in the Input sheet). If the data are reported on a gross basis, then the template assumes that the interest rate paid on monetary debt (held by the Central Bank) is equal to that paid on non-monetary domestic debt (held by the public). If data on domestic debt and interest payments are reported on a net basis, then the template uses the net public domestic debt during the previous period to calculate the implicit average interest rates on public domestic debt.

The assumptions allow the user to specify the projected maturity structure of domestic debt, by inserting the average number of years needed to amortize the current stock of debt (cells S54:X54). By default, the template assumes that the maturity structure is constant and equal to the maturity calculated for the last year of actual data.

17
# **Box 1. Baseline Input Data Requirements**

A. **Baseline Input Data Requirements** Dt=Bt+etB*t-etNFA*t, public sector net debt, end of the period (eop), in local currency units (LCU) Bt : domestic net/gross debt in LCU (excludes net credit to the government of the Central bank), eop B*t : foreign debt in LCU (includes domestic debt issued in FX and any domestic debt linked to FX), eop NFA*t: stock of net foreign assets in dollar terms, in LCU, eop PRP<sup>*</sup> t<sup>: amortization on external MLT debt, in LCU</sup> PRPt: amortization on domestic MLT debt, in LCU Int<sup>*</sup> t<sup>: interest payment on public foreign debt, in LCU</sup> CBHt: Holding of government securities by the Central Bank, in LCU, eop. STDt: Short term debt, in LCU eop. Et: nominal exchange rate LCU/$, eop Et, av: nominal exchange rate LCU/$, average (av) Mt: monetary base at the eop, period t Pt,AV: average CPI level for period t Yt: real GDP in period t in LCU Tt: tax revenue, in LCU Gt: total primary expenditure, in LCU INTt: Total public interest expenditure, in LCU OBt: Overall balance of the public sector, in LCU itl is the dollar nominal interest rate earned over reserves over the period t itd is the nominal interest rate on domestic debt paid over the period t (average) itf is the dollar nominal interest rate paid on foreign debt and reserves over the period (average)

# B. **Variables Calculated by the Template**

π t,AV=(Pt,AV-Pt-1,AV)/Pt-1,AV is average consumer price inflation from year t-1 to year t π∗ t,AV=(P*t,AV-P*t-1,AV)/P*t-1,AV, where P*t is the average U.S consumer price index. gt: (Yt-Yt-1)/Yt-1, real GDP growth rate in the year t.

st=(Et-Et-1)/Et-1, rate of change of the nominal exchange rate, LCU/1US$, eop êt=(1+st)*(1+ π *t,AV)/(1+ π t,AV)-1 is the rate of change in bilateral real exchange rate, (LCU per 1 USD), where + denotes real depreciation, while – denotes real appreciation. PBt=( Tt - Gt)- primary balance as a share of GDP Maturity=(B<sup>*</sup> t<sup>+B</sup> t<sup>)/(PRP*</sup> t<sup>+PRP</sup> t<sup>)</sup> Real interest rate on public debt: α _t_ ⋅{[ 1( + _itf_ ) ⋅ 1( + _e_ ) _t_ ) /(1 + π _t_ * ) ]− 1 }+ 1( − α _t_ ) ⋅{[ 1( + _itd_ ) /(1 + π _t_ ) ]− 1 } Share of external public debt in total public debt, α t=B<sup>*</sup> t-1<sup>/(B*</sup> t-1<sup>+B</sup> t-1<sup>)</sup> Gross Financing Needs = -Pdt+PRP<sup>*</sup> t<sup>+PRP</sup> t<sup>+STD</sup> t σ t=(Mt-Mt-1)/(PtYt ) is defined as seigniorage revenue as ratio to GDP. OFt are other exogenous factors of public debt accumulation that may increase or decrease the outstanding stock of net public debt such as privatization receipt or recognition of contingent liabilities – percent of GDP.

pd- primary balance as a share of GDP Tt: total government revenues in LCU Gt: total non-interest expenditure in LCU 18
# **4. The Seigniorage Sheet and Steady State Fiscal Consistency Approach (as in Anand and van Wijnbergen)**

## **4.1. Seigniorage**

The sheet “Seigniorage” calculates seigniorage for each year of the projection period and in the long run, assuming that real growth and inflation remain constant at their values as in last year of projection period. To account for link between seigniorage revenue and inflation, we benchmark seigniorage revenue using a Cagan money demand function, where nominal base money stock, M at the end of each period t-1 is a function of nominal income and expected average inflation during the period t: Where _M teop_ − 1 is Base Money at the end of period _t-1,_ Pt,AV is the average CPI in year _t,_ π t,AV=(Pt,AVPt-1,AV)/Pt,AV, Yt is the real GDP in year _t,_ η is the semi-elasticity of money demand with respect to inflation and A is a constant term. In sheet “Seigniorage” (Fig. 3), data to calculate base money are reported in cells A9:I15. All data are linked to the input sheets.

The sheet “Seigniorage” also calculates the inflation maximizing seigniorage revenue for each year of the projection period, using the Cagan money demand formula and assuming a semi-elasticity of inflation of 0.3 (see cells B20:H20; Seigniorage sheet, Fig. 4): For the purpose of the derivation of the long –run sustainability condition at the end of the projection period, steady state seigniorage revenue σ is calculated, assuming that money demand grows at a constant rate, given that both inflation and real growth rate are at their constant long-run values: (cell I5:I23; Seigniorage sheet): 19
<!-- Start of picture text -->
|i= | Inflation maximizing seignorage SO [= [= [= (S(T [SN = ( [ [—|<br>Money demandis assumed to be modelled according a Cagan money demand, assuming unitary elasticity of real money balances to income<br>y=Semi-elasticity of inflation 0.3<br>zs 2005 2006 2007 2008 2003 2010 2011 Steady state growth rates<br>| 2 |<br>| a |Base money(eop.) 7498.53 41395,040.08 45,036, 986.47 48,036, 771.63 53182, 036.57 57, FO5 578.25 62,009, 344.66<br>| 10 | Nominal @OP 481,913,760.59 536,258,722 46 588 155,326.04 638,903,475.65 654,328,352. 16 75456 1336.71 820,019 532.67<br>[it| Real GOF 449259.8191 INGE. 5159 1579973992 15834207 TAteB ated 182932, 2192 191973.8299 ee<br>Real GOP growth rate 48% 5.0% 5.0: 5.0% 5.0% 5.0% 5.0% 5.0% ae<br>CPI Indes (in percent] 4206883.53 454404.53 sTE47 431049.13 BOS235.24 Se6024.10 B44. 4 i<br>Be Sealing macra O07 ce<br>[18|Base moneu in percent of GOP 6.1 6.05% 6.0tr B.0tK 6.0tr Bote B.0tK a<br>Projected seignorage OFM 0.63% 0.6 OBI O.6t 0.6 Ob ee<br>Inflation maximizing seignorage 28 a3 38 a3 a3 38 38<br>This block caluclates seignorage assuming Seigniorage (GDP %) Steady state seignorage oS<br>varying inflation rate For each period. meted ie<br>The masimum seignorage is reported inrow 22. o.000 20% Oe OAK Oe O4n 0.0% OAK i<br>Inflation maximizing seigniorage reported in raw 24. 0.050 22K Oi ars U7 Ors O4% ars ce<br>lid | 4 | > |b) Seigniorage O50 Be 44h AZ_npe486 |4| ——446= ee4am 436 eerie48HEeIr+<br><!-- End of picture text -->
baseline. If fiscal adjustment needed to maintain stable debt ratios is considered unachievable, the tool would signal that higher inflation is likely in the event of shocks.

The fiscal policy consistency estimates also the maximum seigniorage revenue that could be obtained by monetizing the fiscal deficit and therefore defines the minimum RDR, given inflation maximizing seigniorage (Fig.6), for the three alternative scenarios.

**Figure 5. Required Deficit Reduction**

(In percent of GDP)

**Figure 6. Inflation Maximizing Seigniorage**

<!-- Start of picture text --> 15.0 10.0%<br>Baseline<br>10.0 Steady state alternative Country Specific Alternative Scenario 9.0%<br>Historical Scenario 8.0%<br>5.0<br>7.0%<br>0.0 6.0%<br>Steady state<br> historical 5.0%<br>-5.0<br>4.0%<br>-10.0 Steady state 3.0%<br>baseline<br>-15.0 2.0%<br>1.0%<br>-20.0<br>0.0%<br>0% 200% 400% 600% 800% 1000%<br>Inflation rate<br>Inflation rates<br> (% of GDP) Percent of GDP<br>Required Deficit Reduction<br>0% 100% 300% 500% 700% 900%<br><!-- End of picture text --> 21
# **5. The Base Case Scenario Sheet**

The sheet "Table" lists the main macroeconomic assumptions used in the fiscal sustainability analysis. The sheet also shows the dynamic forward-looking debt simulation (derived from debt updating equation shown in Annex A1)<sup>4</sup> . The sheet also summarizes the results of alternative scenarios and bound tests.

Sheet “Table_SR” reports the same results of the baseline analysis in a printable format.

## **5.1. Dynamic Forward-Looking Debt Simulation**

The change in **Net public debt** (the sum of net external and net domestic public debt) is decomposed in the different factors as reported in Table 1, with the sign of the contribution to the change in net public debt in percent of GDP. The FSA tool presents the factors of the debt decomposition as in Table 2: the primary balance (line 4, a negative term indicate a primary surplus), seigniorage revenue (line 7, a negative item) and automatic debt dynamics factors (line 8). The automatic debt dynamics is further decomposed into a contribution of the real interest rate net of real growth rate (line 9) and the capital gain or loss on external public debt due to changes in the real exchange rate (line 15, a positive item indicates a real depreciation)<sup>5</sup> . The contribution of the real interest rate distinguishes between the contribution of real interest rate on domestic and foreign public debt, net of interest rate earned on NFA (see Table 3 for the mathematical derivation of the different terms of the debt decomposition). The template also includes other debt-creating or debtreducing flows (line 15, a positive item): privatization receipts (line 16, a negative item); recognition of contingent liabilities (line 17, a positive item); and other factors (in line 18, such as the cost of recapitalizing the banking sector, a positive item).

The public debt ratio is then projected as the sum of the debt ratio in the previous period and the total sum of the contributions of various factors as described above. Since many market access countries are credit constrained, the template allows for a pre-determined path of external public debt, deriving domestic public debt path as a residual. This base case public debt decomposition also indicates the relative importance of various contributing factors to the evolution of the debt ratio. Finally, it also serves as a basis for stress tests, by simulating a number of shocks by assuming some deviation of variables used in this public debt decomposition from their historical averages. The results of these tests are summarized as well, together with the baseline assumptions and projections in sheet “Table” and “Table_SR” (see Table 4)<sup>6</sup> .

> 4 Footnotes also report the formulas in the spreadsheet.

> 5 Note that full separation between the different channels in the debt equation is not possible. As a result, the term defined as real exchange rate depreciation also includes the exchange rate revaluation effect on interest payments  on foreign currency denominated debt.

> 6 Stochastic simulation exercises conducted for a sample of emerging market countries indicate that debt crises are typically preceded by shocks to economic variables equal to two standard deviations during two years.

22
**Table 1. Component of the change in public net debt to GDP ratio**

|Component|Formula|Sign|Line in<br>“Table”|
|---|---|---|---|
|1) Primarybalance:|)<br>(<br>_t_<br>_t_<br>_t_<br>_g_ −|+|4|
|2) Seigniorage:|_t_<br>σ|-|7|
|4) Domestic real interest rate cost:|)<br>1(<br>)<br>1(<br>)<br>(<br>1<br>_t_<br>_t_<br>_t_<br>_t_<br>_t_<br>_d_<br>_g_<br>_b_<br>_i_<br>+<br>⋅<br>+<br>⋅<br>−<br>−<br>π<br>π|+|11|
|5) Foreign real interest rate cost|)<br>1(<br>)<br>1(<br>)<br>(<br>)<br>1(<br>)<br>1(<br>)<br>(<br>*<br>1<br>*<br>*<br>*<br>1<br>*<br>*<br>_t_<br>_t_<br>_t_<br>_t_<br>_t_<br>_l_<br>_t_<br>_t_<br>_t_<br>_t_<br>_t_<br>_f_<br>_g_<br>_nfa_<br>_i_<br>_g_<br>_b_<br>_i_<br>+<br>⋅<br>+<br>⋅<br>−<br>−<br>+<br>⋅<br>+<br>⋅<br>−<br>+<br>−<br>−<br>π<br>π<br>π<br>π|+|12-13|
|3) Real GDP growth:|1<br>)<br>1(<br>−<br>⋅<br>+<br>_t_<br>_t_<br>_t_<br>_d_<br>_g_<br>_g_|-|14|
|6) Capital loss due to real exchange<br>rate depreciation|[<br>]<br>)<br>1(<br>)<br>1(<br>)<br>)<br>1(<br>)<br>1(<br>*<br>1<br>*<br>1<br>*<br>^<br>_t_<br>_t_<br>_t_<br>_t_<br>_l_<br>_t_<br>_t_<br>_f_<br>_t_<br>_g_<br>_nfa_<br>_i_<br>_b_<br>_i_<br>_e_<br>+<br>⋅<br>+<br>⋅<br>+<br>−<br>⋅<br>+<br>⋅<br>−<br>−<br>π|+|15|

# **5.2. Dynamic Consistency Measure**

The FS tool also calculates two additional sustainability indicators: the primary balance at which debt-output ratio is stabilized in each projection year and at the end of the projection period (cells:Y39; Table sheet): In addition, the FS tool also calculates the corresponding required deficit reduction, defined as the difference between projected and debt - stabilizing primary balance during each projection year and in the long run (at the end of the projection period) (cell: Y40; Table sheet). Note that a positive number indicates inconsistency between inflation targets and stable debt ratios - if public debt is to be kept constant, larger fiscal adjustment is necessary to avoid higher inflation that would otherwise close the gap by bringing in more seigniorage revenue.

# **5.3. Additional Outputs**

The template also reports the gross financing needs of the public sector (defined as the public sector deficit, plus all maturing debt). This variable is derived, for all the scenarios as well as for the sensitivity tests, in percent of GDP and in billions of dollars (sheet “Table_GF”).<sup>7</sup>

> 7 In the stress and bound tests the calculations of the gross financing needs assume the same maturity structure as in the baseline scenario.

23
The third section of the output table provides information regarding the macroeconomic assumptions underlying the baseline scenario and how they compare to historical outcomes. In this section the historical averages and standard deviations are calculated over the past 10 (5) years, to calibrate stress tests and bound tests. Eventually, the fourth section of the output table reports the result of the stress tests and bound tests.

24
# **Table 2. Output of the sheet “Table_SR”**

Table --.: Public Sector Debt Sustainability Framework, 2001-2011 (In percent of GDP, unless otherwise indicated)

||||**Actual**||||||**Projection**|**s**|||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||2001|2002|2003|2004|2005||2006|2007|2008|2009<br>|201|0|2011||
|||||||||||||||**Debt-stabilizing**|
|||||||||**I. B**|**aseline Proje**|**ctions**||||**primary**|
|||||||||||||||**balance 11/**|
|**Public sector debt 1/**|89.5|77.8|69.8|63.2|61.2||**54.2**|**49.0**|**44.5**|**39.6**|**3**|**4.4**|**29.0**|**-0.8**|
|o/w foreign-currency denominated (net) 2/|37.3|32.0|21.9|17.5|17.1||16.1|15.1|14.0|13.5|1|2.8|12.1||
|o/w domestic debt (net) 3/|52.2|45.8|47.9|45.8|44.1||38.0|34.0|30.4|26.1|2|1.7|16.9||
|Change in public sector debt|32.0|-11.7|-8.0|-6.6|-2.0||-7.1|-5.1|-4.6|-4.9|-|5.1|-5.4||
|Identified debt-creating flows (4+7+8+16)<br>|30.0<br>|-16.9<br>|-14.6<br>|-8.1<br>|-2.1<br>||-7.1<br>|-5.1<br>|-4.6<br>|-4.9<br>|-<br>|5.1<br>|-5.4<br><br>||
|Primary deficit|-7.8|-6.3|-6.8|-7.0|-6.5||-6.5|-6.5|-6.5|-6.5|-|6.5|-6.5||
|Revenue and grants|75.9|70.8|70.0|67.1|67.2||66.0|65.3|65.3|65.3|6|5.3|65.3||
|<br>Primary (noninterest) expenditure|68.1|64.5|63.2|60.1|60.7||59.4|58.8|58.8|58.8|5|8.8|58.8||
|Seignorage|-3.6|-0.9|-0.9|-1.5|-0.6||-0.7|-0.6|-0.6|-0.6|-|0.6|-0.6||
|Automatic debt dynamics:|23.6|-9.7|-7.0|0.4|5.5||0.6|2.4|2.6|2.3||2.0|1.7||
|Contribution from interest rate/growth differential|13.6|-2.2|2.6|2.6|4.5||0.7|2.5|2.6|2.4||2.1|1.8||
|<br>Of which contribution from real interest rate<br>Contribution from domestic real interest rate 4/|9.0<br>7.3|4.4<br>2.2|6.8<br>5.8|8.3<br>7.3|7.4<br>6.2||3.7<br>2.1|5.1<br>3.5|5.0<br>3.5|4.5<br>3.1||4.0<br>2.7|3.5<br><br>2.2||
|Contribution from real interest rate on forein debt 5/|23|21|12|13|16||17|17|16|15||1|13||
|g<br>Contribution from real interest rate on net foreign assets 6/|.<br>-0.5|.<br>0.1|.<br>-0.2|.<br>-0.2|.<br>-0.4||.<br>-0.1|.<br>-0.1|.<br>-0.1|.<br>-0.1|-|.<br>0.1|.<br><br>-0.1||
|Of which contribution from real GDP growth<br>|4.7<br>|-6.6<br>|-4.3<br>|-5.7<br>|-2.9<br>||-2.9<br>|-2.6<br>|-2.3<br>|-2.1<br>|-<br>|1.9<br>|-1.6<br><br>||
|Contribution from real exchange rate depreciation 7/<br>Other identified debt-creating flows<br>|10.0<br>17.8<br>|-7.5<br>0.0<br>|-9.6<br>0.0<br>|-2.2<br>0.0<br>|0.9<br>-0.4<br>||-0.2<br>-0.4<br>|-0.1<br>-0.4<br>|-0.1<br>0.0<br>|-0.1<br>0.0<br>|-|0.<br>0.0<br>|-0.1<br><br>0.0<br><br>||
|Privatization receipts (negative)<br>Recognition of implicit or contingent liabilities|17.8<br>0.0|0.0<br>0.0|0.0<br>0.0|0.0<br>0.0|-0.4<br>0.0||-0.4<br>0.0|-0.4<br>0.0|0.0<br>0.0|0.0<br>0.0||0.<br>0.0|0.0<br><br>0.0||
|<br>Other (specify, e.g. bank recapitalization)|0.0|0.0|0.0|0.0|0.0||0.0|0.0|0.0|0.0||0.0|0.0||
|Residual, including asset changes (2-3)|2.0|5.2|6.6|1.5|0.1||0.0|0.0|0.0|0.0||0.0|0.0||
|Public sector debt-to-revenue ratio 1/|117.9|109.9|99.7|94.2|91.1||82.1|75.1|68.1|60.6|5|2.7|44.4||
|Primary deficit that stabilizes the debt-to-GDP ratio|-398|54|12|-04|-45||06|-14|-19|-16|-|14|-11||
|<br>Required deficit reduction|.<br>32.0|.<br>-11.7|.<br>-8.0|.<br>-6.6|.<br>-2.0||.<br>-7.1|.<br>-5.1|.<br>-4.6|.<br>-4.9|-|.<br>5.1|.<br><br>-5.4||
|**Gross financing** **need 9/**|96.1|66.4|46.1|36.3|36.9||34.3|31.2|28.3|24.9|2|1.5|17.9||
|in billions of U.S. dollars|140.0|122.5|111.0|109.8|128.9<br>10-Year<br>|10-Year<br>|125.1|122.3|119.4|114.0|10|6.2|96.0||
|**Key Macroeconomic and Fiscal Assumptions**|||||Historical<br>Average|Standard<br>Deviation||||||||Projected<br>Average|
|Real GDP growth (in percent)|-7.5|7.9|5.8|8.9|4.8<br>4.0|5.6|5.0|5.0|5.0|5.0||5.0|5.0|5.0|
|Averae nominal interest rate on ublic debt (in ercent) 10/|585|330|275|223|196<br>400|139|110|132|131|131|1|2|128|127|
|g p p<br>Average nominal interest rate on public domestic debt (in percent) 11/|.<br>80.3|.<br>51.1|.<br>42.0|.<br>28.0|.<br>.<br>22.0|.|.<br>11.3|.<br>14.6|.<br>14.6|.<br>14.6|1|.<br>4.6|.<br><br>14.6|.|
|Average nominal interest rate on forex debt (in percent) 11/|113|79|57|80|103<br>84|20|104|109|109|109|1|09|109|108|
|<br>Average nominal interest rate on NFA (in percent) 12/|.<br>11.3|.<br>7.9|.<br>5.7|.<br>8.0|.<br>.<br>10.3|.|.<br>5.0|.<br>5.0|.<br>5.0|.<br>5.0||.<br>5.0|.<br><br>5.0|.|
|Average real interest rate (including exchange rate revaluation on foreign currency denominated debt)|31.8|-2.2|-3.2|9.4|13.8<br>8.2|11.2|5.5|8.9|9.5|9.3||9.2|9.0|8.6|
|<br>Average real interest rate on public domestic debt (nominal rate minus change in CPI, in percent)|26.9|6.6|16.8|18.2|15.2<br>19.3|20.9|5.3|10.2|11.2|11.1|1|1.1|11.1|10.0|
|Average real interest rate on forex debt (nominal rate minus change in CPI, in percent)<br>Change in the real exchange rate (Local currency per US dollar) 13/<br>|8.5<br>44.3<br>|6.3<br>-20.3<br>|3.5<br>-30.6<br>|5.4<br>-10.3<br>|7.6<br>6.0<br>5.1<br><br>|1.8<br>|8.0<br>-1.0<br>|8.4<br>-0.5<br>|8.4<br>-0.4<br>|8.4<br>-0.8<br>|-<br>|8.4<br>0.8<br>|8.4<br><br>-1.0<br><br>|8.4|
|Nominal appreciation (increase in US dollar value of local currency, in percent)|-53.6|-11.8|17.7|4.3|-8.5<br>-24.0|24.1|-2.4|-1.4|-0.5|-0.2|-|0.2|0.0|...|
|Inflation rate (in percent)<br>US Ifli i|53.4<br>28|44.5<br>16|25.2<br>23|9.9<br>27|6.8<br>51.2<br>27|29.7|6.0<br>24|4.5<br>25|3.5<br>25|3.5<br>25||3.5<br>2|3.5<br><br>25|4.1|
|naton rate (n percent)<br>Growth of real primary spending (deflated by GDP deflator, in percent)|.<br>1.5|.<br>2.0|.<br>1.4|.<br>3.6|.<br>5.9<br>16.9|35.9|.<br>2.8|.<br>3.8|.<br>5.0|.<br>5.0||.<br>5.0|.<br><br>5.0|4.4|
|Base Money (percent of GDP)|10.1|7.7|7.0|7.8|7.8<br>8.1|1.2|7.7|7.7|7.7|7.7||7.7|7.7||
|||||||||**II. Stress**|**Tests for Publ**|**ic Debt Rat**|**io**|||**Debt-stabilizing**<br>**primary**|
|**A. Alternative Scenarios**||||||||||||||**balance 17/**|
|A1. Key variables are at their historical averages in 2005-09 14/<br>|||||||**60.2**<br>|**59.3**<br>|**58.6**<br>|**57.8**<br>|**5**<br>|**6.6**<br>|**55.1**<br><br>|**-0.8**<br>|
|A2. No policy change (constant primary balance) in 2005-09|||||||**54.2**|**47.8**|**42.5**|**36.8**|**3**|**0.9**|**24.6**|**-0.1**|
|A3. Country-specific shock in 2005, with reduction in GDP growth (relative to baseline) of one standard<br>l il i ih k f i|deviation|15/|||||**96.1**<br>|**105.5**<br>|**107.8**<br>|**113.5**<br>|**12**<br>|**1.3**<br>|**130.5**<br><br>|**-13.2**<br>|
|A4. Seected varabes are consstent wt maret orecast n 2005-09<br>**B. Bound Tests**|||||||**54.2**|**49.0**|**44.3**|**39.3**||**4.**|**28.5**|**-0.7**|
|B1. Real interest rate is at historical average plus two standard deviations in 2005 and 2006|||||||**76.3**|**96.9**|**94.4**|**91.6**|**8**|**8.6**|**85.4**|**-3.0**|
|B2. Real GDP growth is at historical average minus two standard deviations in 2005 and 2006<br>B3 Primar balance is at historical averae minus two standard deviations in 2005 and 2006|||||||**71.0**<br>**601**|**93.7**<br>**611**|**107.7**<br>**571**|**122.2**<br>**528**|**13**<br>|**7.3**<br>**8**|**152.8**<br><br>**434**|**-5.8**<br>**-14**|
|. y g<br>B4. Combination of 2-4 using one standard deviation shocks|||||||**.**<br>**76.9**|**.**<br>**97.2**|**.**<br>**96.3**|**.**<br>**95.1**|**9**|**.**<br>**3.8**|**.**<br><br>**92.2**|**.**<br>**-4.6**|
|B5. One time 30 percent real depreciation in 2005 16/<br>|||||||**63.5**<br>|**58.7**<br>|**54.6**<br>|**50.2**<br>|**4**<br>|**5.5**<br>|**40.6**<br><br>|**-1.3**<br>|
|B6. 10 percent of GDP increase in other debt-creating flows in 2005|||||||**64.2**|**59.4**|**55.4**|**51.0**||**6.**|**41.5**|**-1.3**|

25
# **5.4. Oil Rich Country Base Case Scenario Sheet**

If the ORC function is enabled in the “Instructions” sheet, all output and calculation sheets show the suffix ”_oil”, with the exception of the sheets “Table”, “Seigniorage” and of the sheets used to perform the stochastic simulations and produce the fan charts: “StochSim”, “Graph DSP SIM”, “outputsim” and “rdrsim”.

The structure of the results of the debt sustainability analysis reported in the sheets “Table” and “Table_SR_Oil” remains equal to the standard analysis as presented in this section. However, the debt decomposition assumes a fiscal rule for the non-oil primary deficit, financed through the oil revenues evaluated at a reference budget price and the change in net debt depends also on the accumulation of net oil assets in an oil-stabilization fund, according to the debt decomposition formula presented in Appendix A2<sup>8</sup> and summarized in Table 3.

The change in **Net public debt** , is decomposed in (Table 4) the non-oil primary deficit (line 4, a negative term indicate a primary surplus), oil revenues at reference price (line 7, a negative item), seigniorage revenue (line 8, a negative item) and automatic debt dynamics factors (line 9). The automatic debt dynamics is further decomposed into a contribution of the real interest rate net of real growth rate (line 10) and the capital gain or loss on external public debt due to changes in the real exchange rate (line 15, a positive item indicates a real depreciation)<sup>9</sup> . The contribution of the real interest rate distinguishes between the contribution of real interest rate on domestic and foreign public debt . The change in net public debt also depends on the accumulation of net oil assets (line 16), which includes the net inflow in the oil stabilization fund of oil revenues net of oil revenues evaluated at the reference price and interest earned on the stock of oil assets<sup>10</sup> . The template also includes other debt-creating or debt-reducing flows (line 19).

The second section of the output sheet reports the non-oil primary deficit that stabilizes the public debt to GDP ratio and the required deficit reduction (RDR) with respect to the baseline non-oil primary deficit to stabilize the debt ratio. In addition the table reports also:

- 1) the main assumptions underlying the fiscal rule: market and reference oil price and the nonoil primary deficit as a percentage of non-oil GDP;

- 2) the stock of assets in the oil stabilization fund and the net annual changes; 3) the gross public debt (net of central bank holding of government securities); and 4) the gross financing needs.

The third section reports the underlying general macroeconomic variables and the fourth section the result of the alternative scenarios and bound tests.

> 8 Footnotes also report the formulas in the spreadsheet.

> 9 Note that full separation between the different channels in the debt equation is not possible. As a result, the term defined as real exchange rate depreciation also includes the exchange rate revaluation effect on interest payments on foreign currency denominated debt and on the interest earned on NFA and the oil stabilization fund. 10 The interest element includes also the interest earned on other NFA.

26
**Table 3. Component of the change in public net debt to GDP ratio for ORC**

|Component|Formula|Sign|Line in<br>“Table”|
|---|---|---|---|
|1) Non-oilprimarybalance:|)<br>(<br>_t_<br>_t_<br>_t_<br>_g_ −|+|4|
|2)Oil revenues at referenceprice|oilrt|-|7|
|3) Seigniorage:|_t_<br>σ|-|8|
|4) Domestic real interest rate cost:|)<br>1(<br>)<br>1(<br>)<br>(<br>1<br>_t_<br>_t_<br>_t_<br>_t_<br>_t_<br>_d_<br>_g_<br>_b_<br>_i_<br>+<br>⋅<br>+<br>⋅<br>−<br>−<br>π<br>π|+|12|
|5)Forein real interest rate cost|)<br>(<br>1<br>*<br>*<br>_t_<br>_t_<br>_t_<br>_f_<br>_b_<br>_i_<br>⋅<br>−<br>−<br>π|+|13|
|g|)<br>1(<br>)<br>1(<br>*<br>_t_<br>_t_<br>_g_<br>+<br>⋅<br>+<br>π|||
|6) Real GDP growth:|1<br>)<br>1(<br>−<br>⋅<br>+<br>_t_<br>_t_<br>_t_<br>_d_<br>_g_<br>_g_|-|14|
|7) Capital loss due to real exchange<br>rate depreciation|[<br>]<br>)<br>1(<br>)<br>1(<br>)<br>(<br>)<br>1(<br>)<br>1(<br>*<br>*<br>1<br>1<br>*<br>1<br>*<br>^<br>_t_<br>_t_<br>_t_<br>_t_<br>_t_<br>_l_<br>_t_<br>_t_<br>_f_<br>_t_<br>_g_<br>_oa_<br>_nfa_<br>_i_<br>_b_<br>_i_<br>_e_<br>+<br>⋅<br>+<br>+<br>⋅<br>+<br>−<br>⋅<br>+<br>⋅<br>−<br>−<br>−<br>π|+|15|
|8) Net changes in the assets of the oil<br>stabilization fund|*<br>*<br>1<br>*<br>1<br>*<br>*<br>)<br>1(<br>)<br>1(<br>)<br>(<br>)<br>(<br>_t_<br>_t_<br>_t_<br>_t_<br>_t_<br>_t_<br>_t_<br>_l_<br>_oa_<br>_g_<br>_oa_<br>_nfa_<br>_i_<br>+<br>+<br>⋅<br>+<br>+<br>⋅<br>−<br>−<br>−<br>π<br>π|-|16|

27
<!-- Start of picture text --> hide<br>Table «+. Nigena: Pubbc Sector Debt Sustanabdity Framework 2001-2011<br>{In percent of GDP, undess otherwise medicated)<br>Acteal —— Preis<br>Debt stabilizing<br>1. Baseline Projections primary<br>balamee 11<br>1 Public sector debt 1/ #0 6 327 Ma? 22 235 Als 588 152 20 1075 MS<br>olw foreign-curency denominated (nef) 2/ “8 #3 aI 9 19 90 532 654 4 29 09<br>ofw domestic debt (net) 32 uz 96 12 36 135 ue 66 02 ot 166<br>2 Change m pubbe sector debt 42 146 a9 130 wo 32 1738 7s 164 163 4 oo<br>34 Identified debt-creatingflows (49748416) 1s 33 tld 79 190 22 178 ATS 64 168 184 oo<br>3 Nos-oil primary deficit Bo 179 83 15 191 179 184 wa 75 17 185 Ms<br>6 — PrimaryRevenue(noninterest) and grants expenditure 696 w2ry m4a1 26S0 23766 238red 9a4 m190 m196 ams98 109Bs<br>Od revermue at referep n eece -25t mt ms 190 184 99 193 188 192 93 183 188<br>7 Seignorage 24 42 2 OA 42 07 06 05 05 OA oA 04<br>&9 Automaticdebs dynamaes: AT a9 58 34 59 Os a4 28 a u o7 03<br>10 — ContnlbulsonOf which conteibution from uterest rate/growthfrom real interest differentialrete 037 27ced a919 a9tu 12o4 OL00 a412 oo)a 33or 33oo 1032 183<br>" Contrbutson from domestic real mterest rate 4 oo or oo Ot 43 os wu 10 06 oo a0 18<br>a24 OfContributionwhich contributionfrom real fromnnterest rate real GDP growth on fortign debt 5/ a47 a7as 591s 30au 22os 03ol ou12 00a oo27 ooMu“ oo42 oo49<br>15 Contnbulson from real exchange rale depreciation 7/ 20 10 1s 33 al o4 or 04 13 23 26 23<br><!-- End of picture text --> <!-- Start of picture text --> Net edlow w: the od stetakration fland oo oo 12 us 133 184 1738 168 4? “41 34 34<br>is Contabution from real uiterest rate on od aseete S/ 06 ao 05 03 0A 7 10 Ad 6 ao 20 22<br>19 Other identified debt-creating flows 16 43 00 00 00 oo 00 00 oo oo 00 oo<br>i) Prvatcation recespts (negalsve) 16 43 oo oo oo oo oo oo oo oo oo oo<br>2 Recognition of impbest or contingent bebuities oo 00 00 oo 00 oo 00 oo oo oo 00 oo<br>22 Other (apeeily, og bank reeapetakeation) oo oo oo oo oo oo oo 00 oo oo oo oo<br>23 Residual inchiding aeet changes (2-3) 63 178 33 OL 479 oo 00 00 00 oo 00 00<br>PubhePromarysectordeficitdebt-toreversuethet stabdites theratzo I/debt-to-GDP ratio 473reo wT33 5165wl BieMS 3961 B58wt a23 6511M6 786Bd PGMS 1076.7340<br>Required defied redaction: a4 us 13 100 @3 133 v4 Bs 68 7m ta<br>IMF WEO oll price USS/ObE 243 230 29 3 34248 M5 BS 73 49 4A wt<br>Ou Reference Prices for Frscal Rule USSObL a3 20 mo 20 wow 330 no no m6 32 ug<br>Ou stabdization fund net inflow, % of OOP oo 00 12 nz 1338 134 78 168 47 M41 134<br>Od staknktation fund net assets aa 79 Mr Bs Bsa ae 73 oa ma cal 95<br>Nom Od Primary Deficit, % of Now Ol GDP 42 2 Ba A aan 3h BS 350 330 335 Ss<br>Gross Public Debt (In billions of US dollars) Bs “5 a1 #2 748 4 179 ws 73 73 175<br>(in percent of GDP) 213 x79 43 oy nos 163 4 143 137 131 130<br>Gross financing need 9/ nA a7 2337 252 Me 3s aS “7 62 m2 ms<br>in billions of US, doles 145 4 148 180 243 10-You 10-Year Ms 22 66 "3 1019 124<br>Key Macroeconomic and Fiscal Asswmptons HatonealAverage _ Deviation,Staredand aeiiznionFor debt __Averege__Propected<br>Real OU GDP growth (in percent) is St ia 45 $s Sh $a 3A 40 40 40<br>Read Non-OdGDP growth<br><!-- End of picture text --> <!-- Start of picture text --> Average nomind wierest rate on pudlic debt (in percent) 10/ oo 00 00 oo 00 oo 00 13352624 146 146 146 146 146 146 2225559<br>AverageAverage nomena witerest rate on pubbe domestic debt (m percent)11/ 72 43 146 m2 133 mm 146 146 46 146 146<br>Average nominal interest rate on forex debt (in percent) L1/ $6 57 $4 43 44 46 au 19 AL 37 32 26 22 22 28<br>Average nominal interest rate on NFA (in percent) 12/ 36 57 j4 4g 44 50 50 50 50 30 50<br>Average real mterest rate (including exchange rate revabastion on foreign currency denomi A? 12 06 Jt 123 AG 72 25 32 19 os 109 uo sé mM<br>Average real interest rate on public domestic debt (nominal rate minus change in CPI, in pe os 3 os Os 33 on 96 36 82 92 o4 ne us 94<br>Change inreal the rt e alrest exchange rate on forexrate (Local debt (nomacurre n alcy raeper US manusdoar)change 1/ wn CPI, wn percent) 4627 2542 39a 42 15916 25 20 “aoa4 a216 ov12 or20 oz32 0332 a3<br>InflationNondnal appreciationGncrease in US doDar value of local currency, in percent) 37 34 66 25 23 39 43 34 33 35 33 35 33 35 .<br>‘US Inflationreterate (in percent)(in percent) 13022 13716 14023 15027 192a7 ial 69 us24 6s25 35a3 a223 3025 30a5 30 56<br>Growth of real pamary spending (deflated by GOP deflator, in percent) 310 “22 143 69 106 157 ne 29 73 02 6? 73 69 $2<br>Base Money (percent ofGOP) wt ws 94 6 39 a7 19 37 36 36 36 36 38 Debt-stabilizing<br>A. Alternative Scenarios TL Stress Tests for Public Debt Ratio bakameeprimary17/<br>Al Key vanables are of then tastoncal averages mi 20519 1a 24 261 BS 497 598 os 6D<br>A2. No pobry change (constant primary balence) in 2005-09 35 22126 196879 191640 19436 198761 3133<br>A3. Country-specific shock in 2005, with reduction in GDP growth (relative to baselines) of one standard deviation 15/ 166 MB 402 oo 813 wD 16<br>AA Selected variables art consistent with market forecast in 2005.09 Ma 35D S35 794 1062 1365 Ms<br>B. Bound Tests<br>Bi. Realinterest rete is at historical average plas two standard deviations in 2005 and 2006 M9 378 S70 792 1048 1332 1<br>B2. Real ODP growth is at histoncal average minus two standard deviations in 2005 and 2006 169 406 635 890 18. 1498 M3<br>BS.BA Primary balanceis at historical average manus two standard deviations in 2005 and 2006 37 539 76.7 1027 ino 1644 62<br>BS Combunaton of 2.4 urng one standard deviation shocks m0 455 ORS war Imo 1565 62<br>BS. One10 percent time 3) percentof ODP increasereal depeecsationin other debt-creating in 2005 t6/ flows in 205 MoD97 444ap 43164 783860 ora1108 1389str 6Dm1<br><!-- End of picture text -->
# **6. The Alternative Scenario Sheets**

The sheet “Table” also summarizes the four alternative scenarios and the six bound tests. The template contains the following alternative scenarios: _Historical Average Scenario_ : This scenario presents an alternative evolution of the debt ratio under the assumption that all key variables (real growth rate, real interest rates, inflation, real exchange rate, primary balance to GDP ratio, seigniorage revenue to GDP ratio are constant and equal to their historical averages over the projection period. The template calculates averages over a ten-year period, and uses that information to project debt dynamics five years ahead.<sup>11</sup> This scenario is a rough test of the “realism” of baseline projections; the baseline projections may be argued to be overly optimistic when it differs remarkably from predicted debt evolution if historical patterns were followed. Of course, this scenario may be somewhat misleading if significant changes in economic policies have taken place in recent history—using the early years of transition, for instance, would bias the “historical” value of certain parameters and thus might result in too high a debt ratio. More generally, circumstances reflecting credible changes in policies (and thus lower baseline debt ratio projections) may look anomalous in comparison. In any case, using this scenario—and justifying any large anomalies—could usefully discipline baseline projections.

The “A1_historical” sheet (Table 5) reports the result of this scenario. Key real macroeconomic variables are assumed to be at their historical average, as calculated in the bottom section of the sheet (cells B71:L76, Fig. 4). The table reports in red the variables modified with respect to the baseline scenario: primary balance, primary expenditure, seigniorage revenue, the real and nominal interest rates on domestic, foreign debt and NFA of the Central Bank and growth of real primary spending.

> 11 If country teams wish to change the parameters used in this scenario, changes should be made in the “Table” sheet, and justification provided.

29
# **Table 5. “A1_historical” sheet**

## **Alternative Scenario 1: Key Variables at Historical Average**

(In percent of GDP, unless otherwise indicated)

||**Actual**|||**Projecti**|**ons**||||
|---|---|---|---|---|---|---|---|---|
||2005|2006|2007|2008|2009|2010|2011||
|**I. Baseline Medium-T**|**erm Projecti**|**ons**||||||**Debt-stabilizing**<br>**primary**<br>**deficit**|
|Public sector debt 1/|61.2|**60**|**59**|**59**|**58**|**57**|**55**||
|o/w foreign-currency denominated (net)|17.1|17.9|18.2|18.5|19.6|21.0|23.0||
|o/w foreign-currency denominated (gross)|22.7|23.3|23.3|23.4|24.3|25.4|27.1||
|o/w domestic debt (net) 3/|44.1|42.3|41.0|40.1|38.1|35.6|32.2||
|Change in public sector debt|-2.0|-1.0|-1.0|-0.6|-0.8|-1.1|-1.5|0.0|
|Identified debt-creating flows (4+7+12)|9.4|-1.0|-1.0|-0.6|-0.8|-1.1|-1.5|0.0|
|<br>Primary deficit|4.6|-6.0|-6.0|-6.0|-6.0|-6.0|-6.0|-4.1|
|Revenue and grants|67.2|66.0|65.3|65.3|65.3|65.3|65.3||
|Primary (noninterest) expenditure|71.8|59.9|59.3|59.3|59.3|59.3|59.3||
|Seigniorage|-0.6|-0.7|-0.6|-0.6|-0.6|-0.6|-0.6|-0.6|
|Automatic debt dynamics 2/|5.5|6.2|6.1|6.0|5.8|5.6|5.2|4.7|
|Contribution from interest rate/growth differential|4.5|6.3|6.2|6.1|6.0|5.7|5.4|4.9|
|Of which contribution from real interest rate|7.4|8.7|8.5|8.4|8.2|8.0|7.6|7.1|
|Contribution from domestic real interest rate 4/|6.2|7.7|7.5|7.4|7.2|6.8|6.4|5.8|
|Contribution from real interest rate on foreign debt 5/|1.6|1.3|1.3|1.3|1.3|1.4|1.4|1.5|
|Contribution from real interest rate on net foreign assets 6/|-0.4|-0.3|-0.3|-0.3|-0.3|-0.3|-0.2|-0.2|
|Of which contribution from real GDP growth|-2.9|-2.4|-2.3|-2.3|-2.3|-2.2|-2.2|-2.1|
|Contribution from real exchange rate depreciation 7/|0.9|-0.2|-0.1|-0.1|-0.1|-0.2|-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)|-11.4|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|Public debt in percent of revenues 1/|91.1|91.3|90.7|89.8|88.5|86.8|84.5||
|Primary deficit that stabilizes the debt-to-GDP ratio|6.6|-5.0|-5.1|-5.4|-5.2|-4.9|-4.5|-4.1|
|Required deficit reduction|-2.0|-1.0|-1.0|-0.6|-0.8|-1.1|-1.5|-2.0|
|**Gross financing**5/|36.9|27.6|26.0|24.8|23.6|22.2|20.3||
|in billions of U.S. dollars|128.9|99.6|100.0|101.8|104.0|104.7|103.0||
|||||||||For debt|
|**Key macroeconomic and fiscal assumptions**||||||||stabilization|
|Average nominal interest rate on public debt (percent) 6/|15.9|14.2|12.7|11.7|11.7|11.7|11.7|11.7|
|Average nominal interest rate on public domestic debt (in percent) 11/|22.0|25.3|23.8|22.8|22.8|22.8|22.8|22.8|
|<br>Average interest rate on foreign-currrency denominated debt|10.3|8.4|8.5|8.5|8.5|8.5|8.5|8.5|
|<br>Average nominal interest rate on NFA (in percent) 12/||8.4|8.5|8.5|8.5|8.5|8.5|8.5|
|Average real interest rate (nominal rate minus change in domestic CPI, percent)|9.1|8.2|8.2|8.2|8.2|8.2|8.2|8.2|
|Average real interest rate on domestic debt (nominal rate minus change in domestic CPI, p|15.2|19.3|19.3|19.3|19.3|19.3|19.3||
|Average real interest rate on foreign debt debt (nominal rate minus change in U.S. CPI, pe|7.6|6.0|6.0|6.0|6.0|6.0|6.0||
|<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|0.0|
|<br>Exchange rate (US dollar per LC)|0.0|0.0|0.0|0.0|0.0|0.0|0.0||
|<br>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 (GDP deflator, 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|-13.2|2.9|4.0|4.0|4.0|4.0||
|<br>Base Money (percent of GDP)|7.8|7.8|7.8|7.9|8.0|8.0|8.1||

30
|Descriptor|2005|2006<br>2007<br>2008<br>2009<br>2010<br>2011|
|---|---|---|
|Country-Specific Aliernative Scenario||Fillin yellow cells, based on alternative scenaria|
|||Default is baseline|
||lf no alternative|scenario is assumed, hide line 72 (and fn 9) in “Table_SR." and lines 21|
|Macroeconomicanddebtdata|and40(an|dfn4)in"Table_GF"andfollowinstructionsinsheet"Data_chart".|
|<br>Public sectorbalance|<br>22,129,288||
|Public sector expenditure|346,050,170||
|Public sectorinterest expenditure|43,284,000||
|Public sectorrevenue (and grants)|323,920,882||
|Gross domestic product, currentprices|481,813,761||
|Gross domestic product, constantprices|143,254||
|ConsumerPrice Index|||
|Exchange rate, national currencyperU.8. Dollar, end ofperiod|1,460,000||
|Exchange rate, national currencyperU.S. Dollar, average|1,378,148||
|Domestic counsumer price index|428 684||
|BaseMoney|37,515,500|55,266,208<br>70,389,353<br>82,179,921<br>90,220,797<br>98,613,666)<br>102,994,998|
|Netforeign assets|26,845,485|0<br>i}<br>i}<br>i}<br>a<br>0|
|Foreign-currency denominated debt(expressedin localcurrency)|109,470,697|153,436,540|163,581,444 168,966,200 182,648,028 194,083,213 205,137,490|
|Privatization receipts (negative)|-1,957,671||
|Recognition of implicit or contingent liabilities|a||
|Other(specify, e.g. bank recapitalization)|a||
|Amortization onMLT public sector debt|17,089,000||
|Short-term public sector debt|in}||
|Interestpaymentsonforexdebt|10,116,000||
<!-- Start of picture text --> <r| Gc 2<br>120/Asswmptions Fa<br>| |<br>| |<br>| |<br>| |<br>| |<br>| |<br>199 | |<br><!-- End of picture text -->

|<<br>|| <br>|Gc<br>|2<br>|
|---|---|---|---|
|||||
||||||<br>|
||||<br>||<br>|
||||<br>||<br>|
||||<br>||<br>|
||||<br>||<br>|
||||<br>||<br>|
|199|||<br>|||
|Descriptor||2006|2007|2008|2009|2010|2011|
|---|---|---|---|---|---|---|---|
|Externaldebtmanagementassumptions|4|Chose the strategynumber||||||
|same as the baseline|1|199,7e2,037.3|206,046,587.2|2096068,708.8|Z17,8205709|224640,375.1|231,023,019.4|
|Constantindollarterms|2|199,782,037.3|202624,757.38|<br>203,613,1713)|204037,202.1|<br>204463,518.5|<br>204,463,318.5|
|<br>Constantinpercent ofGDP|3|<br>1997820373|<br>21911E9805|BSR<br>12SSTEA|<br>ARTRATI 2|<br>2R12321592)|<br>305,629,0490|
|Sudden stop in2006 (no disbursements)|4|155,4%6,5404|<br>1635814445|<br> <br>1689662001)|<br>1826480281|<br>194083219.3)|<br>205,137,490.0|
|Dechningpath|3|199,782,037.53|279,208,680.0|3048291875|304968,009.9|291240233.9|2%4.156,243.1|
|<br>Inpercent of GDP||<br>37.3|<br>323|<br>29.0|<br>27|<br>22.6|<br>20.0|
|Constantdecline|||12%|-12%|-12%|-12%5|12%|
|<br>Userdefined|||||||-12%6|
- In addition, the country is assumed not able to borrow internationally in 2006. This scenario corresponds to option 4 of the external debt management section (Fig. 10).

The output of the alternative scenario is reported in sheet “A3_alternative” in the template (Table 6). The decomposition table reports the debt dynamics consistent with the alternative macroeconomic assumptions specified in the input sheet.

34
# **Table 6. Output Table of the Alternative Scenario**

## **Alternative Scenario 3: Country-Specific Scenario**

(In percent of GDP, unless otherwise indicated)

||**Actual**|||**Projection**|**s**||||
|---|---|---|---|---|---|---|---|---|
||2005|2006|2007|2008|2009|2010|2011||
|||||||||**Debt-stabilizing**|
|**I. Baseline M**|**edium-Term Pro**|**jections**||||||**primary**|
|||||||||**deficit**|
|Public sector debt 1/<br>36.1|61.2|**96**|**105**|**108**|**113**|**121**|**130**||
|o/w foreign-currency denominated (net)<br>23.8|17.1|24.5|18.1|14.8|13.6|13.0|12.5||
|o/w foreign-currency denominated (gross)<br>30.8|22.7|24.5|18.1|14.8|13.6|13.0|12.5||
|o/w domestic debt (net) 3/<br>12.3|44.1|71.6|87.3|93.0|99.9|108.3|117.9||
|Change in public sector debt|-2.0|34.9|9.4|2.4|5.6|7.8|9.1|0.0|
|Identified debt-creating flows (4+7+12)|-3.8|34.9|9.4|2.4|5.6|7.8|9.1|0.0|
|Primary deficit|-6.5|-3.0|-3.0|-3.0|-3.0|-3.0|-3.0|**-13.2**|
|<br>Revenue and grants<br>23.9|67.2|55.8|45.2|39.8|38.1|38.3|39.1||
|Primary (noninterest) expenditure<br>21.0|60.7|52.8|42.2|36.8|35.1|35.3|36.1||
|Seignorage|-0.6|-2.8|-1.8|-1.1|-0.7|-0.5|-0.5|-0.5|
|Automatic debt dynamics 2/|3.4|25.7|14.1|6.5|9.3|11.3|12.6|13.7|
|Contribution from interest rate/growth differential|2.4|19.5|10.2|9.2|10.4|11.6|12.7|13.8|
|Of which contribution from real interest rate|5.3|15.6|13.0|12.3|13.5|14.9|16.3|17.6|
|Contribution from domestic real interest rate 4/|4.1|13.4|10.7|10.6|12.3|13.9|15.2|16.6|
|Contribution from real interest rate on foreign debt 5/|1.6|2.4|2.3|1.7|1.2|1.1|1.0|1.0|
|Contribution from real interest rate on net foreign assets 6/|-0.4|-0.2|0.0|0.0|0.0|0.0|0.0|0.0|
|Of which contribution from real GDP growth|-2.9|3.9|-2.8|-3.1|-3.1|-3.3|-3.5|-3.8|
|<br>Contribution from real exchange rate depreciation 7/|0.9|6.1|3.9|-2.7|-1.0|-0.3|-0.1|-0.1|
|<br>Denominator = 1+g+π∗+gπ∗|1.1|1.0|1.1|1.1|1.1|1.1|1.1|1.1|
|Other identified debt-creating flows|0.0|15.0|0.0|0.0|0.0|0.0|0.0|0.0|
|<br>Privatization receipts (negative)|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|<br>Recognition of implicit or contingent liabilities|0.0|15.0|0.0|0.0|0.0|0.0|0.0|0.0|
|<br>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)|1.8|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|Public debt in percent of revenues 1/<br>151.2|91.1|172.3|233.1|271.1|297.5|316.5|333.8||
|Primary deficit that stabilizes the debt-to-GDP ratio|-4.5|-37.9|-12.4|-5.4|-8.6|-10.8|-12.1|-13.2|
|Required deficit reduction|-2.0|34.9|9.4|2.4|5.6|7.8|9.1|10.2|
|**Gross financing**5/|36.9|43.1|50.9|53.1|55.2|57.6|59.3||
|in billions of U.S. dollars|128.9|186.1|288.5|368.3|431.9|485.1|531.9||
|||||||||For debt|
|**Key macroeconomic and fiscal assumptions**||||||||stabilization|
|Real GDP growth (in percent)|4.8|-6.0|3.0|3.0|3.0|3.0|3.0|3.0|
|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/|16.8|80.0|50.0|35.0|25.0|20.0|18.5|18.5|
|<br>Average interest rate on foreign-currrency denominated debt|10.3|12.4|12.5|12.5|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 CPI, percent)|9.1|33.8|18.1|9.2|11.8|13.1|13.6||
|<br>Average real domestic interest rate (nominal rate minus change in CPI, percent)|9.4|40.0|20.0|15.0|15.0|15.0|15.0||
|<br>Change in the real exchange rate (Local currency per US dollar) 13/||30.0|15.0|-14.2|-6.6|-2.2|-1.0|-1.0|
|<br>Nominal depreciation of local currency (LC per dollar)|9.3|77.8|1.4|0.5|0.2|0.2|0.0||
|<br>Exchange rate (US dollar per LC)<br>0.0|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|-43.7|-1.4|-0.5|-0.2|-0.2|0.0||
|Inflation rate (in percent)|6.8|40.0|30.0|20.0|10.0|5.0|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|-18.3|-17.6|-10.3|-1.5|3.5|5.2||
|<br>Base Money (percent of GDP)|7.79|8.7|8.3|7.8|7.6|7.5|7.5||

35
<!-- Start of picture text --> PO Tw<br>[1| Descriptor Motes 2005 2006 2007 2008 2003 2010 20n<br>|2 Firstprojections year oF<br>[at | No-Policy-Change Scenario Fill in yellow cells, based on no-policy-change scenaria<br>Default is unchanged primarg balance, in percent of GOP<br>a4 Insert alternative values into yellow cells, if more elaborate scenario is assumed<br>| | 47,197,000.0<br>| 3596 | Public sector balaexpe n diturece 346,050-22,129 , 170298 . 34 359,225,9762,297,970.1 395,123,152290,610.9 424,924,601, 9 ,61167.9 457 176,9729,616,463.0 15,966,326.4491,421,330 23,395,659.9527,899,201<br>| Of primary 292,650,170.3 325,719,643.8 357,241,263.0 338,065,319.6 421,725,986.0 455,315,062.3 498,073,894.0<br>|_ 9938 | Public sector interestrevenue expenditure (and grants] [grass] 323,920,881953,400,000.0 36032 ,5 2306 , 946332 . 24 395413,762.637,881,588.7 42936 , 864,251.8531479.2 46635 , 793446 , 335886 .0 507,33,106, 287,656 268 . 29 29,825,307.4551294,8611<br>100 | Gross domestic product, current prices 481,813,760.6 536,258, 722.5 588,155,326.0 639,903,475.6 694,328,352.2 754,561,336.7 820,019,522.7<br>101 | Gross domestic product, constant prices 143,253.8 150, 416.5 167,937.3 165, 834.2 174,125.9 182,832.2 191,973.8<br>Exchange rate, national currency per U.S. Dollar, end of period 1,460,000.0 1496,579.2 1517 867.3 1525,271.5 1628,452.5 1531,640.0 1531,640.0<br>104 Exchange rate, national currency per U.S. Dollar, average 1,378,148.1 1,469, 730.6 1,498,531.7 1,512,525.2 1,519,903.4 1527, 317.5 1527,317.56<br>8 || PublicConsumer debt Price Index (net) 295,086,759428,683.5 287,762,8354544045 261,244,523474,047.23 271,469,1204910491 255,811,149508,235.28 235,216,076B26,024.1 202,063,5745444349<br>Fonts<br>108 | GOP Deflator (percent change) 6.00 445 346 3.50 3.50 3.50<br>[10[103| Real revenue and grants TSS6LE 79339.4 $3306.9 era?22 a145.8 964381 101260.0<br>iin | RealGrowth non-interestin real rev e nuxp e nditures and grants B8267.2 FIBSO5 . 50 T5264.65.0 Foo27.85.0 S2973.25.0 8712815.0 31434.65.0<br>Growth of real non-interest expenditures: 5.0 5.0 5.0 5.0 5.0 5.0<br>Share of Foreign-currency denominated debt in total debt (previous period) O3 O.3 O.3 0.3 o4 o4<br>(114_| Interest rate on public domestic debt ga 125 12.3 12.0 115 7<br>ae Real interest rate on public debt, including capital gains on the exchange rate 4.63 Rie o.27 Tae 7.59 F.03<br>Gross financing need 17,193,029.9 19,736,383. 18,425,132.1 10,410,537.0 4160,673.6 -3,368,653.9 ~~<br>Mo 40> WK Instructions }Input_fiscal / Seigniorage / Table f StochSim / Table_SR, /Table_Gr. f 2|<¢ ><br><!-- End of picture text -->
# **Table 7. Output Table of the No Policy Change Scenario**

## **Alternative Scenario 2: No Policy Change (Constant Primary Balance)**

(In percent of GDP, unless otherwise indicated)

||**Actual**||**Projections**|||||
|---|---|---|---|---|---|---|---|
||2005<br>2006|2007|2008|2009|2010|2011||
||||||||**Debt-stabilizing**|
|**I. Base**|**line Medium-Term Projections**||||||**primary**|
||||||||**deficit**|
|Public sector debt 1/|61.2<br>**53.7**|**47.8**|**42.5**|**36.8**|**30.9**|**24.6**||
|o/w foreign-currency denominated (net)|17.1<br>16.0|14.7|13.4|12.5|11.5|10.3||
|o/w foreign-currency denominated (gross)|22.7<br>21.3|19.8|18.3|17.2|15.9|14.4||
|o/w domestic debt (net) 3/|44.1<br>37.7|33.1|29.1|24.3|19.4|14.4||
|Change in public sector debt|-2.0<br>-7.6|-5.8|-5.3|-5.6|-5.9|-6.3|0.0|
|Identified debt-creating flows (4+7+12)|-4.2<br>-7.6|-5.8|-5.3|-5.6|-5.9|-6.3|0.0|
|Primary deficit|-6.5<br>-6.5|-6.5|-6.5|-6.5|-6.5|-6.5|**-0.1**|
|Revenue and grants|67.2<br>67.2|67.2|67.2|67.2|67.2|67.2||
|Primary (noninterest) expenditure|60.7<br>60.7|60.7|60.7|60.7|60.7|60.7||
|Seignorage|-0.6<br>-0.7|-0.6|-0.6|-0.6|-0.6|-0.6|-0.6|
|Automatic debt dynamics 2/|3.4<br>0.0|1.7|1.8|1.5|1.2|0.8|0.7|
|Contribution from interest rate/growth differential|2.4<br>0.2|1.8|1.8|1.6|1.3|1.0|0.8|
|Of which contribution from real interest rate|5.3<br>3.1|4.3|4.1|3.6|3.0|2.4|2.0|
|Contribution from domestic real interest rate 4/|4.1<br>1.6|2.8|2.7|2.3|1.8|1.3|0.9|
|Contribution from real interest rate on foreign debt 5/|1.6<br>1.7|1.7|1.6|1.4|1.3|1.2|1.1|
|Contribution from real interest rate on net foreign assets 6/|-0.4<br>-0.1|-0.1|-0.1|-0.1|-0.1|-0.1|-0.1|
|Of which contribution from real GDP growth|-2.9<br>-2.9|-2.6|-2.3|-2.0|-1.8|-1.5|-1.2|
|Contribution from real exchange rate depreciation 7/|0.9<br>-0.2|-0.1|-0.1|-0.1|-0.1|-0.1|-0.1|
|Other identified debt-creating flows|-0.4<br>-0.4|-0.4|0.0|0.0|0.0|0.0|0.0|
|Privatization receipts (negative)|-0.4<br>-0.4|-0.4|0.0|0.0|0.0|0.0|0.0|
|Recognition of implicit or contingent liabilities|0.0<br>0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|Other (specify, e.g. bank recapitalization)|0.0<br>0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|<br>Residual, including asset changes (2-3)|2.2<br>0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|Public debt in percent of revenues 1/|91.1<br>79.8|71.1|63.2|54.8|46.0|36.7||
|Primary deficit that stabilizes the debt-to-GDP ratio|-4.5<br>1.1|-0.6|-1.2|-0.8|-0.6|-0.2|-0.1|
|Required deficit reduction|-2.0<br>-7.6|-5.8|-5.3|-5.6|-5.9|-6.3|-6.4|
|**Gross financing**5/|36.9<br>22.5|20.1|17.0|13.5|9.9|6.2||
|in billions of U.S. dollars|128.9<br>82.0|79.0|71.7|61.6|48.8|33.1|For debt|
|**Key macroeconomic and fiscal assumptions**|||||||stabilization|
|Real GDP growth (in percent)|4.8<br>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<br>11.0|13.2|13.1|13.1|12.9|12.8||
|Average nominal interest rate on public domestic debt (in percent) 11/|16.8<br>9.9|12.5|12.3|12.0|11.5|10.7|10.7|
|Average interest rate on foreign-currrency denominated debt|10.3<br>10.4|10.9|10.9|10.9|10.9|10.9|10.9|
|Average nominal interest rate on NFA (in percent) 12/|10.3<br>5.0|5.0|5.0|5.0|5.0|5.0|5.0|
|Average real interest rate (including real exchange rate appreciation)|10.3<br>4.6|7.7|8.3|7.9|7.6|7.0||
|<br>Change in the real exchange rate (Local currency per US dollar) 13/|5.1<br>-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<br>2.5|1.4|0.5|0.2|0.2|0.0||
|Exchange rate (US dollar per LC)|0.0<br>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)<br>|-8.5<br>-2.4<br><br>|-1.4<br>|-0.5<br>|-0.2<br>|-0.2<br>|0.0<br>||
|Inflation rate (in percent)|6.8<br>6.0|4.5|3.5|3.5|3.5|3.5|3.5|
|<br>US Inflation rate (in percent)|2.7<br>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<br>5.0|5.0|5.0|5.0|5.0|5.0||
|Base Money (percent of GDP)|7.79<br>7.71|7.66|7.66|7.66|7.66|7.66||

37
<!-- Start of picture text --> Pee<br>[1 [Descriptor tes rg ong) a2 S|<br>pep re ee ee ee ee<br>[201 |MarketForecast Scenario |<br>Ee ||<br>EE | |<br>ER | |<br>[205 |Fieal GDP growth{inpercent) ||<br>| 208 | Average realinterest rate on public debt (in percent) HB | |<br>207 [Primary deficitinpersentof@DP | |<br>| ||<br>| 2 1008 |Inflation Average (GOPnominal interestratedetlator,inperceo n thpublic debt(inpercent]| | | |<br>| 212 | Average nominal interest rate onfores debtinpercent] = TH ||||<br>[213 |Other identified debt-creating flows | |<br>[214 | Share of foreign-currency denominated debt in total debt (previous period) | ||<br>[26 |BaseMoney 0 88 | |<br>[26 [Mettoreign assets 8 A ||<br>EBPo CG GG OC<br>4) TCT Ee<br>ow Instructions )Inp els) EE a) Bl<br><!-- End of picture text -->
# **Table 8. Output Table of the Low Oil Price Scenario**

Table --.: Public Sector Debt Sustainability Framework, 2001-2011 (In percent of GDP, unless otherwise indicated)

|||**Proje**|**ctions**|||||
|---|---|---|---|---|---|---|---|
||2006|2007|2008|2009|2010|2011||
||||||||**Debt-stabilizing**|
|||**I Baseline**|**Projecti**|**ns**|||**rimar**|
|||**.**|||||**py**<br>**balance 17/**|
|**Public sector debt 1/**|-1.0|1.2|2.1|3.5|4.8|7.2|**-16.2**|
|o/w foreign-currency denominated (net)|-20.0|-17.2|-14.7|-11.2|-7.7|-4.4||
|o/w domestic debt (net) 3/|19.0|18.4|16.7|14.6|12.5|11.6||
|Change in public sector debt|1.2|2.2|0.9|1.4|1.3|2.4||
|Identified debt-creating flows (4+7+8+16)|1.2|2.2|0.9|1.4|1.3|2.4||
|Non-oil primary deficit|17.9|18.4|17.1|17.5|17.7|18.5||
|Revenue and grants|7.9|8.4|9.0|9.6|9.8|10.0||
|Primary (noninterest) expenditure<br>|25.8<br>|26.9<br>|26.1<br>|27.1<br>|27.5<br>|28.5<br>||
|Oil revenue at reference price 4/<br>Seignorage|-19.9<br>-0.7|-19.3<br>-0.6|-18.8<br>-0.5|-19.2<br>-0.5|-19.3<br>-0.4|-18.8<br>-0.4||
|Ai db di|05|11|08|07|05|04||
|utomatc et ynamcs:<br>Contribution from interest rate/growth differential|.<br>0.1|.<br>1.0|.<br>1.0|.<br>0.9|.<br>0.8|.<br>0.6||
|<br>Of which contribution from real interest rate|0.0|1.0|1.0|1.0|1.0|0.8||
|Contribution from domestic real interest rate 5/|0.3|0.9|1.0|1.0|1.0|0.8||
|Ctibti f l itt t fi dbt 6/|03|01|00|00|00|00||
|onruon rom rea neres rae on oregn e<br>Of which contribution from real GDP growth|-.<br>0.1|.<br>0.0|.<br>-0.1|.<br>-0.1|.<br>-0.2|.<br>-0.2||
|<br>Contribution from real exchange rate depreciation 7/|0.4|0.0|-0.1|-0.3|-0.3|-0.2||
|Contribution from net changes in the assets of the oil stabilization fund|3.4|2.6|2.2|3.0|2.9|2.6||
|Net inflow in the oil stabilization fund<br>|4.1<br>|3.1<br>|2.7<br>|3.4<br>|3.3<br>|2.9<br>||
|Contribution from real interest rate on oil assets 8/|-0.7|-0.6|-0.5|-0.4|-0.4|-0.3||
|Other identified debt-creating flows|00|00|00|00|00|00||
|<br>Privatization receipts (negative)|.<br>0.0|.<br>0.0|.<br>0.0|.<br>0.0|.<br>0.0|.<br>0.0||
|Recognition of implicit or contingent liabilities|0.0|0.0|0.0|0.0|0.0|0.0||
|<br>Other (specify, e.g. bank recapitalization)|0.0|0.0|0.0|0.0|0.0|0.0||
|Residual, including asset changes (2-3)|0.0|0.0|0.0|0.0|0.0|0.0||
|Public sector debt-to-revenue ratio 1/|-12.6|14.1|22.7|36.2|49.0|72.2||
|Primary deficit that stabilizes the debt-to-GDP ratio|16.7|16.3|16.2|16.1|16.3|16.2||
|Required deficit reduction|-9.2|-10.6|-9.9|-11.0|-11.2|-12.4||
|Low-Scenario oil prices US$/bbl|25.0|25.5|26.0|26.5|27.1|27.6||
|<br>Oil Reference Prices for Fiscal Rule US$/bbl|33.0|30.0|30.0|30.6|31.2|31.8||
|Oil stabilization fund net inflow, % of GDP|-4.1|-3.1|-2.7|-3.4|-3.3|-2.9||
|<br>Oil stabilization fund net assets|24.4|21.3|18.6|15.2|11.9|9.0||
|Non-Oil Primary Deficit, % of Non-Oil GDP|38.1|38.5|35.0|35.0|35.5|36.5||
|Gross Public Debt (In billions of US dollars)|18.4|17.9|17.5|17.3|17.3|17.5||
|(In percent of GDP)|16.8|15.4|14.3|13.7|13.1|13.0||
|**Gross financing** **need 9/**|31.5|43.4|51.2|59.9|67.1|76.5||
|in billions of U.S. dollars|34.5|50.3|62.3|75.3|88.5|103.5||
|**Key Macroeconomic and Fiscal Assumptions**|||||||Projected<br>Average|
|Real Oil GDP growth (in percent)|5.1|5.1|5.4|4.0|4.0|4.0||
|<br>Real Non-Oil GDP growth (in percent)|7.0|5.3|5.4|5.5|5.5|5.5||
|<br>Real GDP growth (in percent)|6.1|5.2|5.4|4.8|4.8|4.8|5.2|
|Average nominal interest rate on public debt (in percent) 9/|6.3|9.6|10.5|10.2|9.7|9.7|9.3|
|<br>Average nominal interest rate on public domestic debt (in percent) 10/|16.8|11.9|11.4|10.8|10.1|10.1|11.9|
|Average nominal interest rate on forex debt (in percent) 10/<br>A il i A i 11/|1.0<br>|4.1<br>|3.7<br>|3.2<br>|2.6<br>|2.2<br>|2.8|
|verage nomna nterest rate on NF (n percent)<br>Average real interest rate (including exchange rate revaluation on foreign currency denominat|5.0<br>-2.5|5.0<br>4.0|5.0<br>5.2|5.0<br>6.0|5.0<br>6.7|5.0<br>6.7|4.3|
|<br>Average real interest rate on public domestic debt (nominal rate minus change in CPI, in perce|5.3|5.4|6.0|6.6|7.1|7.1|6.3|
|Average real interest rate on forex debt (nominal rate minus change in CPI, in percent)<br>Average real interest rate on NFA (nominal rate minus change in CPI, in percent)|-1.4<br>2.6|1.6<br>2.5|1.2<br>2.5|0.7<br>2.5|0.2<br>2.5|-0.3<br>2.5|0.3<br>2.5|
|Change in the real exchange rate (Local currency per US dollar) 13/|-4.9|-0.2|0.7|2.0|3.2|3.2|0.6|
|<br>Nominal appreciation (increase in US dollar value of local currency, in percent)<br>Inflation rate (in percent)|-3.4<br>11.5|-3.5<br>6.5|-3.5<br>5.5|-3.5<br>4.2|-3.5<br>3.0|-3.5<br>3.0|-3.5<br>5.6|
|<br>US Inflation rate (in ercent)|24|25|25|25|25|25|25|
|p<br>Growth of real primary spending (deflated by CPI, in percent)<br>Primar deficit|.<br>2.9<br>179|.<br>7.3<br>184|.<br>0.2<br>171|.<br>6.7<br>175|.<br>7.3<br>177|.<br>6.9<br>185|.<br>5.2<br>179|
|y<br>Base Money (percent of GDP)|.<br>5.66|.<br>5.63|.<br>5.55|.<br>5.55|.<br>5.55|.<br>5.55|.|

39
# **7. The Bounds Test Sheets**

Bounds tests are used to assess the behavior of the public debt ratio under different assumptions on key parameters. Shocks equal to 2 standard deviations with respect to the 10-year historical averages during the first two years of the projection period are applied separately to the real interest and growth rates, and the primary balance, respectively. The template also examines debt trajectories in the case of a 30 percent real depreciation of the local currency and a contingent liabilities shock of 10 percent of GDP. The latter is presented as a rough measurement of an increase in debt- creating flows, given the difficulties in discussing contingent liabilities risk.<sup>12</sup> In addition, a combined shock of 1 standard deviation with respect to historical averages of these variables for the first two years of the projection period is also reported. The magnitude of shocks to individual variables is consistent with shocks that have typically been observed in the run-up to a crisis. In the same way, the combined shock is consistent with the historical evidence that such shocks do not happen in isolation, but occur simultaneously.<sup>13</sup> In all bounds tests, variables revert to the baseline projection after two years.<sup>14</sup> It is important to emphasize that these tests do not represent full-fledged scenarios, as there is no interaction among variables. More specifically, the stress tests are built by replacing in the baseline projections the value of one variable (for instance, the interest rate), leaving all other variables unchanged, with only a few exceptions: (i) interest payments on debt are endogenous, i.e., they increase in scenarios where interest rates are higher; (ii) public sector revenues are endogenous with respect to GDP: shocks in the latter also affect revenue; and, of course, (iii) the debt stocks are endogenous. But the remaining parameters are left mostly unchanged: for example, in the stress tests featuring a shock to GDP, the real exchange rate remains unchanged.

Each bounds test is calculated in a different sheet, which presents the debt decomposition table and the gross financing needs modified according to the simulated shock. Variables modified in the bounds tests are highlighted in red as in the case of the alternative scenarios.

## 1) Shock to the Real Interest Rate

This shock is represented in sheet “B1_Irate”. The real interest rates on domestic and foreign debt are supposed to be equal to their historical average plus 2 standard deviations for the first and second year of projections, respectively. The real interest rates return as in the baseline in the following years (cells O49:P55, Table 9).

> 12 This issue was discussed in detail in SM/03/206. Section V presents various approaches to evaluating risks arising from contingent liabilities, distinguishing between those explicit and implicit in nature. Appendix III contains crosscountry econometric evidence on the cost of banking crises.

> 13 See “Sustainability Assessments-Review of Application and Methodological Refinement”, IMF, 2003.

> 14 These shocks are based on the IMF (2003) and serve as a 95 confidence interval around the baseline. In particular, stochastic simulations show that the most extreme bound test provides an upper bound of the debt ratios that is likely to be exceeded only with a probability of less than 1 percent. The second most extreme bound test provides an upper bound likely to be exceeded with a probability between 1 to 5 percent.

40
# 2) Shock to real GDP Growth

This shock is represented in sheet “B2_GDP”. The growth rate is assumed to be equal to the historical average minus 2 standard deviations for the first and second year of projections. The growth rate returns as in the baseline in the following years (cells O48:P48, Table 10).

# 3) Shock to the Primary Balance

This shock is represented in sheet “B3_PB”. The primary deficit (in percent of GDP) is assumed to be equal to the historical average plus 2 standard deviations for the first and second year of projections. The primary deficit returns as in the baseline in the following years (cells O18:P18, Table 11). In addition, primary expenditure adjusts to be consistent with the new primary balance, while revenue remains unchanged with respect to the baseline (cells O20:P20, Table 11).

# 4) Combined Shocks to the real interest rate, growth and the primary balance.

This shock is represented in sheet “B4_Combined”. All three variables are assumed to be equal to their historical averages plus 1 standard deviation for the real interest rate and the primary deficit and minus 1 standard deviation for the growth rate. Shocks are assumed to last the first two years of the projection period. All variables return to their baseline value after the second year (Table. 12).

# 5) Nominal depreciation

This shock is represented in sheet “B5_depreciation”. The nominal exchange rate<sup>15</sup> is assumed to depreciate by 30 percent in the first year of projection. The rate of change of the exchange rate afterwards is equal to what was assumed in the base case. Thus the level of the nominal exchange rate is permanently modified with respect to the baseline (cell O58, Table 13).

# 6) Contingent Liability Shock

This shock is represented in sheet “B6_CL”. The Contingent liabilities shock assumes that other factors increase by 10 percent in the first year of the projection period and return to zero afterwards. The main reason behind this one-off increase is the realization of contingent liabilities. (cell O35, Table 14).

> 15 This scenario assumes inflation as in the baseline. Therefore, the nominal depreciation corresponds to a real depreciation.

41
# **Table 9. Real Interest Rate Bounds Test.**

## **Bound Test 1: Real Interest Rate Shock**

(In percent of GDP, unless otherwise indicated)

||||**Project**|**ions**||||
|---|---|---|---|---|---|---|---|
||2006|2007|2008|2009|2010|2011||
||||||||**Debt-stabilizing**|
|**I. Baseline Medium-Term Projections**|||||||**primary**|
||||||||**deficit**|
|Public sector debt 1/|**76.3**|**96.9**|**94.4**|**91.6**|**88.6**|**85.4**||
|o/w foreign-currency denominated (net)|22.7|29.8|29.8|31.1|32.9|35.6||
|<br>o/w foreign-currency denominated (gross)|28.1|34.9|34.7|35.8|37.3|39.7||
|o/w domestic debt (net) 3/|53.5|67.1|64.6|60.5|55.8|49.8||
|Change in public sector debt|15.0|20.6|-2.5|-2.8|-3.0|-3.2|0.0|
|Identified debt-creating flows (4+7+12)|15.0|20.6|-2.5|-2.8|-3.0|-3.2|0.0|
|Primary deficit|-6.5|-6.5|-6.5|-6.5|-6.5|-6.5|**-3.0**|
|Revenue and grants|66.0|65.3|65.3|65.3|65.3|65.3||
|Primary (noninterest) expenditure|59.4|58.8|58.8|58.8|58.8|58.8||
|<br>Seigniorage|-0.6|-0.5|-0.5|-0.5|-0.5|-0.5|-0.5|
|Automatic debt dynamics 2/|22.5|28.0|4.5|4.2|4.0|3.7|3.5|
|Contribution from interest rate/growth differential|22.8|28.2|4.6|4.5|4.3|4.1|3.8|
|Of which contribution from real interest rate|25.7|31.8|9.2|8.9|8.6|8.3|7.9|
|Contribution from domestic real interest rate 4/|24.2|29.8|6.9|6.6|6.2|5.7|5.1|
|Contribution from real interest rate on foreign debt 5/|2.0|2.5|2.7|2.7|2.8|2.9|3.1|
|Contribution from real interest rate on net foreign assets 6/|-0.5|-0.5|-0.4|-0.4|-0.4|-0.3|-0.3|
|Of which contribution from real GDP growth|-2.9|-3.6|-4.6|-4.5|-4.4|-4.2|-4.1|
|Contribution from real exchange rate depreciation 7/<br>|-0.3<br>|-0.2<br>|-0.1<br>|-0.2<br>|-0.3<br>|-0.3<br>|-0.4<br>|
|Other identified debt-creating flows|-0.4|-0.4|0.0|0.0|0.0|0.0|0.0|
|Privatization receipts (negative)|-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|
|Other (specify, e.g. bank recapitalization)|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|Residual, including asset changes (2-3)|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|Public debt in percent of revenues 1/|115.6|148.3|144.5|140.3|135.7|130.8||
|Primary deficit that stabilizes the debt-to-GDP ratio|-21.5|-27.1|-4.0|-3.7|-3.5|-3.2|-3.0|
|Required deficit reduction|15.0|20.6|-2.5|-2.8|-3.0|-3.2|-3.5|
|**Gross financing**5/|46.1|58.6|44.4|41.6|38.6|34.9||
|in billions of U.S. dollars|168.3|230.1|187.5|190.0|190.7|187.4||
||||||||For debt|
|**Key macroeconomic and fiscal assumptions**|||||||stabilization|
|Real GDP growth (in percent)|5.0|5.0|5.0|5.0|5.0|5.0|5.0|
|Average nominal interest rate on public debt (percent) 6/|36.5|35.0|13.0|12.8|12.7|12.5|12.5|
|Average nominal interest rate on public domestic debt (in percent) 11/|67.0|65.5|14.6|14.6|14.6|14.6|14.6|
|Average interest rate on foreign-currrency denominated debt|12.0|12.1|10.9|10.9|10.9|10.9|10.9|
|Average nominal interest rate on NFA (in percent) 12/|12.0|12.1|10.9|10.9|10.9|10.9|10.9|
|<br>Average real interest rate (nominal rate minus change in GDP deflator, percent)|30.5|30.5|9.5|9.3|9.2|9.0|9.0|
|Average real interest rate on domestic debt (nominal rate minus change in domestic CPI, perc|61.0|61.0|11.2|11.1|11.1|11.1||
|<br>Average real interest rate on foreign debt debt (nominal rate minus change in U.S. CPI, percen|9.6|9.6|8.4|8.4|8.4|8.4||
|Change in the real exchange rate (Local currency per US dollar) 13/|-1.0|-0.5|-0.4|-0.8|-0.8|-1.0|-1.0|
|<br>Nominal depreciation of local currency (LC per dollar)|2.5|1.4|0.5|0.2|0.2|0.0|0.0|
|<br>Exchange rate (US dollar per LC)|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)|-2.4|-1.4|-0.5|-0.2|-0.2|0.0||
|Inflation rate (in percent)|6.0|4.5|3.5|3.5|3.5|3.5|3.5|
|US Inflation rate (in percent)|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)|2.8|3.8|5.0|5.0|5.0|5.0||
|<br>Base Money (percent of GDP)|7.7|7.7|7.7|7.7|7.7|7.7||

42
# **Table 10. Real GDP Bounds Test**

## **Bound Test 2: Real Output Shock**

(In percent of GDP, unless otherwise indicated)

||**Actual**||**Pr**|**ojections**|||||
|---|---|---|---|---|---|---|---|---|
||2005|2006|2007|2008|2009|2010|2011||
|||||||||**Debt-stabilizing**|
|**I. Baseline Mediu**|**m-Term Projections**|||||||**primary**|
|||||||||**deficit**|
|Public sector debt 1/|61.2|**71.0**|**93.7**|**107.7**|**122.2**|**137.3**|**152.8**||
|o/w foreign-currency denominated (net)|17.1|21.2|28.8|34.0|41.5|50.9|63.6||
|o/w foreign-currency denominated (gross)|22.7|26.5|33.9|38.9|46.2|55.3|67.8||
|<br>o/w domestic debt (net) 3/|44.1|49.9|64.9|73.7|80.7|86.4|89.1||
|Change in public sector debt|-2.0|9.8|22.7|14.1|14.5|15.1|15.5|0.0|
|Identified debt-creating flows (4+7+12)|-1.7|9.8|22.7|14.1|14.5|15.1|15.5|0.0|
|Primary deficit|-6.5|1.3|10.0|10.0|10.0|10.0|10.0|**-5.8**|
|<br>Revenue and grants|67.2|66.0|65.3|65.3|65.3|65.3|65.3||
|<br>Primary (noninterest) expenditure|60.7|67.3|75.3|75.3|75.3|75.3|75.3||
|<br>Seigniorage|-0.6|0.2|0.3|-0.6|-0.6|-0.6|-0.6|-0.6|
|Automatic debt dynamics 2/|5.5|8.7|12.9|4.6|5.1|5.6|6.0|6.4|
|Contribution from interest rate/growth differential|4.5|8.9|13.0|4.8|5.4|6.0|6.5|7.1|
|Of which contribution from real interest rate|7.4|4.1|7.4|9.2|10.5|11.8|13.1|14.3|
|Contribution from domestic real interest rate 4/|6.2|2.4|5.2|6.7|7.5|8.3|8.8|9.1|
|Contribution from real interest rate on foreign debt 5/|1.6|1.9|2.4|2.7|3.0|3.6|4.3|5.3|
|<br>Contribution from real interest rate on net foreign assets 6/|-0.4|-0.2|-0.1|-0.1|-0.1|-0.1|-0.1|-0.1|
|<br>Of which contribution from real GDP growth|-2.9|4.8|5.5|-4.5|-5.1|-5.8|-6.5|-7.3|
|Contribution from real exchange rate depreciation 7/|0.9|-0.2|-0.1|-0.1|-0.3|-0.3|-0.5|-0.6|
|Other identified debt-creating flows|0.0|-0.5|-0.5|0.0|0.0|0.0|0.0|0.0|
|Privatization receipts (negative)|0.0|-0.5|-0.5|0.0|0.0|0.0|0.0|0.0|
|<br>Recognition of implicit or contingent liabilities|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|<br>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|107.7|143.5|165.0|187.2|210.3|233.9||
|Primary deficit that stabilizes the debt-to-GDP ratio|-4.5|-8.5|-12.6|-4.0|-4.5|-5.0|-5.4|-5.8|
|Required deficit reduction|-2.0|9.8|22.7|14.1|14.5|15.1|15.5|15.9|
|**Gross financing**5/|36.9|38.5|59.2|66.2|72.3|77.8|82.1||
|<br>in billions of U.S. dollars|128.9|124.1|181.2|218.3|257.8|300.1|343.9||
|||||||||For debt|
|**Key macroeconomic and fiscal assumptions**||||||||<br>stabilization|
|Real GDP growth (in percent)|4.8|-7.2|-7.2|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|
|<br>Average interest rate on foreign-currrency denominated debt|10.3|10.4|10.9|10.9|10.9|10.9|10.9|10.9|
|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||
|<br>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||
|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|2.8|3.8|5.0|5.0|5.0|5.0||
|<br>Base Money (percent of GDP)|7.8|7.7|7.7|7.7|7.7|7.7|7.7||

43
# **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||

44
# **Table 12. Combined Bounds Test**

## **Bound Test 4: Combined One Standard Deviation Shock**

(In percent of GDP, unless otherwise indicated)

|**Actual**|||**Project**|**ions**||||
|---|---|---|---|---|---|---|---|
|2005|2006|2007|2008|2009|2010|2011||
||||||||**Debt-stabilizing**|
|**I. Baseline Medium-Term Pro**|**jections**||||||**primary**|
||||||||**deficit**|
|Public sector debt 1/<br>61.2|**76.9**|**97.2**|**96.3**|**95.1**|**93.8**|**92.2**||
|o/w foreign-currency denominated (net)<br>17.1|22.9|29.9|30.4|32.3|34.8|38.4||
|o/w foreign-currency denominated (gross)<br>22.7|28.2|35.0|35.3|36.9|39.2|42.6||
|o/w domestic debt (net) 3/<br>44.1|54.0|67.4|65.9|62.8|59.0|53.8||
|Change in public sector debt<br>-2.0|15.6|20.4|-1.0|-1.2|-1.3|-1.6|0.0|
|Identified debt-creating flows (4+7+12)<br>-1.7|15.6|20.4|-1.0|-1.2|-1.3|-1.6|0.0|
|<br>Primary deficit<br>-6.5|-3.3|-3.3|-6.5|-6.5|-6.5|-6.5|**-4.6**|
|<br>Revenue and grants<br>67.2|66.0|65.3|65.3|65.3|65.3|65.3||
|<br>Primary (noninterest) expenditure<br>60.7|62.6|62.0|58.8|58.8|58.8|58.8||
|Seigniorage<br>-0.6|0.2|0.2|0.6|0.6|0.6|0.6|0.6|
|Automatic debt dynamics 2/<br>5.5|19.1|24.0|4.9|4.7|4.6|4.3|4.0|
|Contribution from interest rate/growth differential<br>4.5|19.3|24.1|5.1|5.0|4.8|4.7|4.4|
|<br>Of which contribution from real interest rate<br>7.4|18.3|22.9|9.6|9.4|9.2|9.0|8.7|
|Contribution from domestic real interest rate 4/<br>6.2|17.0|21.1|6.9|6.7|6.4|6.0|5.5|
|Contribution from real interest rate on foreign debt 5/<br>1.6|1.8|2.2|2.7|2.8|2.9|3.1|3.3|
|Contribution from real interest rate on net foreign assets 6/<br>-0.4|-0.4|-0.4|-0.1|-0.1|-0.1|-0.1|-0.1|
|Of which contribution from real GDP growth<br>-2.9|1.0|1.3|-4.5|-4.4|-4.4|-4.3|-4.4|
|<br>Contribution from real exchange rate depreciation 7/<br>0.9|-0.2|-0.1|-0.1|-0.2|-0.3|-0.3|-0.4|
|<br>Other identified debt-creating flows<br>0.0|-0.4|-0.5|0.0|0.0|0.0|0.0|0.0|
|<br>Privatization receipts (negative)<br>0.0|-0.4|-0.5|0.0|0.0|0.0|0.0|0.0|
|<br>Recognition of implicit or contingent liabilities<br>0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|<br>Other (specify, e.g. bank recapitalization)<br>0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|<br>Residual, including asset changes (2-3)<br>-0.3|0.0|0.0|0.0|0.0|0.0|0.0|0.0|
|Public debt in percent of revenues 1/<br>91.1|116.5|148.9|147.4|145.6|143.6|141.2||
|Primary deficit that stabilizes the debt-to-GDP ratio<br>-4.5|-18.9|-23.7|-5.5|-5.3|-5.2|-5.0|-4.6|
|Required deficit reduction<br>-2.0|15.6|20.4|-1.0|-1.2|-1.3|-1.6|-1.9|
|**Gross financing**5/<br>36.9|44.4|55.5|45.2|43.2|41.0|38.0||
|in billions of U.S. dollars<br>128.9|151.7|191.3|167.7|173.3|177.7|178.9||
||||||||For debt|
|**Key macroeconomic and fiscal assumptions**|||||||stabilization|
|Real GDP growth (in percent)<br>4.8|-1.6|-1.6|5.0|5.0|5.0|5.0|5.0|
|Average nominal interest rate on public debt (percent) 6/<br>15.9|25.3|23.8|13.0|12.8|12.7|12.5|12.5|
|Average nominal interest rate on public domestic debt (in percent) 11/<br>22.0|46.2|44.6|14.6|14.6|14.6|14.6|14.6|
|Average interest rate on foreign-currrency denominated debt<br>10.3|10.2|10.3|10.9|10.9|10.9|10.9|10.9|
|<br>Average nominal interest rate on NFA (in percent) 12/|10.2|10.3|5.0|5.0|5.0|5.0|5.0|
|<br>Average real interest rate (nominal rate minus change in GDP deflator, percent)<br>9.1|19.3|19.3|9.5|9.3|9.2|9.0|9.0|
|Average real interest rate on domestic debt (nominal rate minus change in domestic CPI, p<br>15.2|40.2|40.2|11.2|11.1|11.1|11.1||
|<br>Average real interest rate on foreign debt debt (nominal rate minus change in U.S. CPI, percent)|7.8|7.8|8.4|8.4|8.4|8.4||
|Change in the real exchange rate (Local currency per US dollar) 13/<br>51|-10|-05|-04|-08|-08|-10|-10|
|<br>.<br>Nominal depreciation of local currency (LC per dollar)<br>9.3|.<br>2.5|.<br>1.4|.<br>0.5|.<br>0.2|.<br>0.2|.<br>0.0|.<br>0.0|
|<br><br>Exchange rate (US dollar per LC)<br>0.0|0.0|0.0|0.0|0.0|0.0|0.0||
|<br>Nominal appreciation of local currency (increase in US dollar value of local currency)<br>-8.5|-2.4|-1.4|-0.5|-0.2|-0.2|0.0||
|<br>Inflation rate (in percent)<br>6.8|6.0|4.5|3.5|3.5|3.5|3.5|3.5|
|US Inflation rate (in percent)<br>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)<br>5.9|1.5|-2.7|-0.4|5.0|5.0|5.0||
|,<br><br>Base Money (percent of GDP)<br>7.8|7.7|7.7|7.7|7.7|7.7|7.7||

45
# **Table 13. Nominal Exchange Rate Depreciation**

## **Bound Test 5: Real Exchange Rate Shock**

(In percent of GDP, unless otherwise indicated)

||**Actual**|||**Projection**|**s**||||
|---|---|---|---|---|---|---|---|---|
||2005|2006|2007|2008|2009|2010|2011||
|||||||||**Debt-stabilizing**<br>|
||**I. Baseline Me**|**ium-Term Projections**||||||**primary**|
|||||||||**deficit**|
|Public sector debt 1/|61.2|**63.5**|**58.7**|**54.6**|**50.2**|**45.5**|**40.6**||
|o/w foreign-currency denominated (net)|17.1|24.6|23.0|21.4|20.5|19.5|18.4||
|o/w foreign-currency denominated (gross)|22.7|32.7|30.8|28.8|27.6|26.2|24.8||
|o/w domestic debt (net) 3/|44.1|38.9|35.8|33.2|29.7|26.1|22.2||
|Change in public sector debt|-2.0|2.2|-4.7|-4.1|-4.4|-4.7|-4.9|0.0|
|Identified debt-creating flows (4+7+12)|-1.7|2.2|-4.7|-4.1|-4.4|-4.7|-4.9|0.0|
|<br>Primary deficit|-6.5|-6.5|-6.5|-6.5|-6.5|-6.5|-6.5|**-1.3**|
|Revenue and grants|67.2|66.0|65.3|65.3|65.3|65.3|65.3||
|Primary (noninterest) expenditure|60.7|59.4|58.8|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|9.8|2.8|3.0|2.7|2.5|2.2|1.9|
|<br>Contribution from interest rate/growth differential|4.5|0.7|3.0|3.1|2.9|2.6|2.4|2.1|
|Of which contribution from real interest rate|7.4|3.7|6.0|5.9|5.5|5.0|4.6|4.1|
|Contribution from domestic real interest rate 4/|6.2|2.1|3.6|3.7|3.4|3.0|2.7|2.3|
|Contribution from real interest rate on foreign debt 5/|1.6|1.7|2.6|2.4|2.3|2.2|2.0|1.9|
|<br>Contribution from real interest rate on net foreign assets 6/|-0.4|-0.1|-0.2|-0.2|-0.2|-0.2|-0.2|-0.1|
|<br>Of which contribution from real GDP growth|-2.9|-2.9|-3.0|-2.8|-2.6|-2.4|-2.2|-1.9|
|Contribution from real exchange rate depreciation 7/|0.9|9.1|-0.1|-0.1|-0.2|-0.2|-0.2|-0.2|
|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|
|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|96.2|90.0|83.6|76.9|69.7|62.2||
|Primary deficit that stabilizes the debt-to-GDP ratio|-4.5|-8.7|-1.8|-2.4|-2.1|-1.9|-1.6|-1.3|
|Required deficit reduction|-2.0|2.2|-4.7|-4.1|-4.4|-4.7|-4.9|-5.2|
|**Gross financing**5/|36.9|26.6|25.9|23.3|20.3|17.1|13.7||
|in billions of U.S. dollars|128.9|97.1|102.1|99.4|93.9|85.9|74.7||
|||||||||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|
|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|50.9|-0.5|-0.4|-0.8|-0.8|-1.0|-1.0|
|<br>Nominal depreciation of local currency (LC per dollar)|9.3|56.2|1.4|0.5|0.2|0.2|0.0||
|<br>Exchange rate (US dollar per LC)|0.0|0.000|0.000|0.000|0.000|0.000|0.000||
|Nominal appreciation of local currency (increase in US dollar value of local currency)|-8.5|-36.0|-1.4|-0.5|-0.2|-0.2|0.0||
|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|2.8|3.8|5.0|5.0|5.0|5.0||
|<br>Base Money (percent of GDP)|7.8|7.7|7.7|7.7|7.7|7.7|7.7||

46
# **Table 14. Contingent Liabilities Shock**

## **Bound Test 6: Contingent Liability Shock**

(In percent of GDP, unless otherwise indicated)

||**Actual**|||**Project**|**ions**||||
|---|---|---|---|---|---|---|---|---|
||2005|2006|2007|2008|2009|2010|2011||
|||||||||**Debt-stabilizing**|
|**I. Baseline Medium-Term**|**Projections**|||||||**primary**|
|||||||||**deficit**|
|Public sector debt 1/|61.2|**64.2**|**59.4**|**55.4**|**51.0**|**46.4**|**41.5**||
|o/w foreign-currency denominated (net)|17.1|19.1|18.3|17.5|17.3|17.2|17.3||
|o/w foreign-currency denominated (gross)|22.7|24.5|23.4|22.4|22.0|21.6|21.4||
|o/w domestic debt (net) 3/|44.1|45.0|41.2|37.9|33.7|29.2|24.2||
|Change in public sector debt|-2.0|2.9|-4.7|-4.1|-4.4|-4.6|-4.9|0.0|
|Identified debt-creating flows (4+7+12)|-1.7|2.9|-4.7|-4.1|-4.4|-4.6|-4.9|0.0|
|Primary deficit|-6.5|-6.5|-6.5|-6.5|-6.5|-6.5|-6.5|**-1.3**|
|Revenue and grants|67.2|66.0|65.3|65.3|65.3|65.3|65.3||
|<br>Primary (noninterest) expenditure|60.7|59.4|58.8|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|2.8|3.0|2.7|2.5|2.2|1.9|
|Contribution from interest rate/growth differential|4.5|0.7|2.9|3.1|2.9|2.6|2.4|2.1|
|Of which contribution from real interest rate|7.4|3.7|6.0|6.0|5.5|5.1|4.6|4.1|
|Contribution from domestic real interest rate 4/|6.2|2.1|4.2|4.2|3.9|3.4|3.0|2.5|
|Contribution from real interest rate on foreign debt 5/|1.6|1.7|1.9|1.8|1.8|1.7|1.7|1.7|
|Contribution from real interest rate on net foreign assets 6/|-0.4|-0.1|-0.1|-0.1|-0.1|-0.1|-0.1|-0.1|
|<br>Of which contribution from real GDP growth|-2.9|-2.9|-3.1|-2.8|-2.6|-2.4|-2.2|-2.0|
|<br>Contribution from real exchange rate depreciation 7/|0.9|-0.2|-0.1|-0.1|-0.1|-0.1|-0.2|-0.2|
|Other identified debt-creating flows|0.0|9.6|-0.4|0.0|0.0|0.0|0.0|0.0|
|<br>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|
|<br>Other (specify, e.g. bank recapitalization)|0.0|10.0|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|97.3|91.0|84.8|78.1|71.0|63.5||
|Primary deficit that stabilizes the debt-to-GDP ratio|-4.5|-9.4|-1.8|-2.4|-2.1|-1.9|-1.6|-1.3|
|Required deficit reduction|-2.0|2.9|-4.7|-4.1|-4.4|-4.6|-4.9|-5.2|
|**Gross financing**5/|36.9|26.9|26.2|23.7|20.7|17.6|14.1||
|in billions of U.S. dollars|128.9|98.3|103.0|100.2|94.7|86.8|75.8||
|||||||||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|
|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||
|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|
|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||
|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|2.8|3.8|5.0|5.0|5.0|5.0||
|<br>Base Money (percent of GDP)|7.8|7.7|7.7|7.7|7.7|7.7|7.7||

47
<!-- Start of picture text --> PopaBf<br>a<br>aes tl ll ae eB<br>66 | 2006 2007 2008 2009 | 2010 | 2011 Debt-stabilizing<br>mca68 | A. Alternative Scenarios IL. Stress Tests for Public Debt Ratio balanceprimary17/<br>Al. Key variables are at their historical averages in 2005-09 14/ 602 593 586 578 566 55.1 -08<br>A2. No policy change (constant primary balance) in 2005-09 542 478 425 368 309 246 0.1<br>A3. Country-specific shockin 2005, with reductionin GDP growth (relative to baseline) ofq 96.1 1055 1078 1135 1213 1305 -132<br>A4. Selected variables are consistent with market forecast in 2005-09 542 490 443 393 34.1 285 07<br>B. Bound Tests<br>70"<br>B1. Real interest rate is at historical average plus two standard deviations in 2005 and 2006 763 969 944 916 886 854 -30<br>B2. Real GDP growth is at historical average minus two standard deviations in 2005 and 20] 710 93.7 107.7 1222 1373 1528 58<br>80 | B 34 . Primary balanceCombination of is2-4 at us h i storicalng one averagestandard minus deviation two shocks standard deviations in 2005 and 2004 60.1769 61.1972 57.1963 52895.1 482938 434922 -1446<br>BS. One time 30 percent real depreciation in 2005 16/ 635 58.7 546 502 455 406 -13<br>B6. 10 percent of GDP increasein other debt-creating flowsin 2005 642 59.4 554 510 464 415 -13<br>«4 > vif Input_fiscal _{ Seigniorage {Table { StochSim },Table_SR. /Table_GF. f Aihistorical, £ |< ><br><!-- End of picture text -->

|Popa<br>|B<br><br>||||||||
|---|---|---|---|---|---|---|---|---|
|||||a<br>|||||
|| 66|<br>||<br>2006|<br>2007<br>|<br>2008<br>|<br>2009 | <br>|<br> 2010 | <br>|<br> 2011|<br>Debt-stabilizing<br><br>|
|| 68 |<br>|A.Alternative Scenarios||IL.Stress|estsforPu|licDebt|atio||primary<br>balance 17/|
|mca|Al.Keyvariablesareattheir historicalaveragesin2005-0914/|602|593|586|578|566|55.1|-08|
||<br>A2.Nopolicychange(constant primarybalance)in2005-09|542|478|425|368|309|246|0.1|
||<br>A3.Country-specificshock<br>in2005,withreduction<br>inGDPgrowth(relativetobaseline)ofq|96.1|1055|1078|1135|1213|1305|-132|
||<br> <br> <br>A4. Selected variables are consistentwithmarketforecast in2005-09|542|490|443|393|34.1|285|07|
||B.BoundTests||||||||
|<sup>70"</sup>|||||||||
||B1.Realinterestrateisathistoricalaverageplustwostandarddeviationsin2005and2006|763|969|944|916|886|854|-30|
||<br>B2. Real GDP growthis athistorical averageminustwo standarddeviations in2005 and20]<br> <br>|710<br><br>|93.7<br><br>|107.7<br><br>|1222<br><br>|1373<br><br>|1528<br><br>|58<br><br>|
||80||**B**3**.**Primary balanceisath**i**storicalaverageminustwostandarddeviationsin2005and2004<br>4Combinationof2-4usngonestandarddeviationshocks|60.1<br>769|61.1<br>972|57.1<br>963|528<br>95.1|482<br>938|434<br>922|-14<br>46|
||<br> <br>BS.Onetime30percentrealdepreciationin200516/|635|58.7|546|502|455|406|-13|
||<br>B6. 10percent of GDP increaseinotherdebt-creatingflows<br>in 2005|642|59.4|554|510|464|415|-13|
|«4<br>>|vifInput_fiscal_{Seigniorage{Table{StochSim},Table_SR./Table_GF.fAihistor|ical,£|<||||||>|
# **Figure 14. Debt Ratios and Gross Financing Needs**

<!-- Start of picture text --> 180<br>Debt-to-GDP Ratio (in percent)<br>160<br>Baseline<br>Alternative scenario (country-specific shock)<br>140<br>Second most extreme stress test<br>Most extreme stress test<br>120<br>100<br>80<br>60<br>40<br>20<br>2005 2006 2007 2008 2009 2010 2011<br>450<br>Gross External Financing Need (in billions of U.S. dollars)<br>400 Baseline<br>Alternative scenario (country-specific shock)<br>350 Second most extreme stress test<br>Most extreme stress test<br>300<br>250<br>200<br>150<br>100<br>50<br>0<br>2005 2006 2007 2008 2009 2010 2011<br>Source: Staff calculations.<br><!-- End of picture text --> 49
<!-- Start of picture text -->
[ [ory [ rw il rx | ry [ rz | ca | cp | cc [| oc | oe | ow | ao | w | a | a | ow | aw [| om | on | co | @ |<br>| 1 | 10000 eHat mu 70,731707735444933 Gmu —_%5,00000049284922 1000 eHatmu °0,731707735444933 Gmu —_%5,00000049284922<br>eHatHat sigmsigm’20,975584385475920; Gsigmasigma %5,629960193644365, eHatHisigm"20,9720; 55843854759 Gsigmasigma 75,629960193644365,<br>| 4 | RiRtt sigma mu "8113621.45 , 3621474067843280339058413857 R sigmamu 10,0065284672488/20,850371930427310,1 RiRt+t mu sigma '3/1362145 , 36214740678432803390584138574. R sigmamu 10,0065284672488'20,850371930427310,0<br>| 6) 61,2449820052006200 | 15,3683 10,8 7 517, -0,665612008, -7,56967,2009-020-18,6689 41,682 61,244820052021,6 0 90962007,»11,85642 3,5701512008, 443492009, 11,9557,amo,-19,5588<br>10 27,7933, 22,88801 26,63335 2624035 30,16613 46,16475 10 20,6895 21,84818 22,10208 22,79591, 22,69054 23,7697<br>| 9 || 2530 13909976,212471.2124) | 7,321371(32137119,9106 | 23,77767,81020878,11 8,50380626,72299|5. 9,085342|28,74517A 9,65437930,5849,¢ 2530 61828611456948,nt 1 20,8172,6,981931,981 7,4956222505113,F 7,45653328,25732|A | 8.81678330,017678 9,12980530,57721)<br>| 10 | 25 6,497353 10,10516 12,82805 15,84117 18,72061 20,6605 25 6,902439 9,960214 1181195 15,10276 16,81453 21,29457<br>| 11 | 10 24,3803, 48,91951 64,39298 9138027 116,5923, 14,0321 10 19,4362, 33,03794 52,10427, 55,61589| 79,1606 108,002<br>| 12 by 61,24498 | 54,1793 49,04186 44,46238 39,58449| 3444434) 29,00372 61,24498 54,17093 49,04186 44,4623 39,58449 34,4434 29,0372<br>| 1 34 |<br>| 16 | Public sector debt Public sector debt<br>[18] 250 200<br>a<br>|20) 200<br>Fl 400 me 30) 100 oe 30<br>| -_ mmm 25 mmm 25<br> 26 | 50 |a _—_____—________ i= 10 50 {ee _ = 10<br>FA 02005 2006 2007 2008 2009 2070 1 = Baseline 0 | ~~ SS — Baseline<br>| 30 | at obs = 2005 «2007, 2008-2 a1<br>FA “100 -60<br>| 33 |<br>| 34 |<br>M4 > il{_B5 Depreciation {B6_CL { Data_chart {Graph Summary) BEMMEaeo Graph Baseline { outputsim { rdrsim {LDBd / | «| l<br><!-- End of picture text -->