AMI’s Submission to the World Bank–IMF LIC-DSF Review
Beyond Debt Ratios: Why Sovereign Resilience Must Shape the Future of Debt Sustainability
Africa Macro Intelligence (AMI) welcomes the ongoing review of the Low-Income Countries Debt Sustainability Framework (LIC-DSF) by the World Bank and the International Monetary Fund. As debt sustainability assessments continue to influence development financing, investment decisions, debt restructuring processes, and concessional lending allocations, it is essential that the framework evolves to reflect the realities confronting low-income countries.
AMI recently participated in the public consultation on the 2026 review of the LIC-DSF. Our submission focused on a simple but increasingly important principle: debt sustainability cannot be understood through debt metrics alone.
Traditional debt sustainability frameworks have provided valuable guidance for policymakers and creditors. However, the economic environment facing low-income countries has become significantly more complex. Sovereign debt outcomes are increasingly shaped by factors that extend beyond fiscal balances, debt-to-GDP ratios, and debt service indicators.
Political instability, governance challenges, climate shocks, public health crises, geopolitical disruptions, demographic pressures, and economic concentration all influence a country’s ability to manage debt obligations over time. Recent experiences across Africa and other developing regions demonstrate that debt distress often emerges from broader systemic vulnerabilities rather than from debt indicators alone.
For this reason, AMI supports the introduction of the proposed long-term module within the LIC-DSF. Extending the analytical horizon beyond traditional medium-term projections is a necessary step. Long-term assessments can help policymakers evaluate the sustainability implications of infrastructure investment, climate adaptation measures, demographic transitions, and broader development strategies.
However, the effectiveness of the long-term module will depend on its ability to incorporate a wider understanding of sovereign resilience.
AMI recommends that future iterations of the framework consider factors such as institutional effectiveness, governance quality, economic diversification, domestic financial sector vulnerabilities, political stability, and climate adaptation readiness. These variables often determine whether countries can absorb shocks, maintain policy credibility, and sustain debt repayment capacity over the long term.
Equally important is the distinction between productive and non-productive borrowing. Debt incurred to finance resilient infrastructure, human capital development, climate adaptation, and economic transformation should be evaluated differently from borrowing that finances recurrent expenditure. The quality and developmental impact of borrowing matters as much as the quantity of borrowing.
For many African countries, the challenge is not simply managing debt levels but securing affordable financing for investments that strengthen long-term growth and resilience. Debt sustainability frameworks should therefore avoid unintentionally discouraging investments that generate future economic and social returns.
AMI believes the next generation of debt sustainability analysis should move beyond measuring debt stocks and repayment burdens alone. It should also assess a country’s capacity to withstand, adapt to, and recover from future economic, political, social, and environmental shocks.
The future of sovereign risk assessment lies not only in understanding debt sustainability, but in understanding sovereign resilience.
As global institutions continue to refine the LIC-DSF, AMI remains committed to contributing research, analysis, and practical insights that support stronger, more resilient economies across Africa.