A Critical Analysis of DSA Projections

In this article, we construct a new database on 606 Debt Sustainability Assessments (DSAs) published for 68 Low Income Countries over 2013–2023, a period covering the last two methodology updates. We study associated forecast errors to account for IMF and WB biases given their central role in the perception of countries‘ performances. The recent methodological change does not display improvement in projection accuracy. DSAs display a tendency for optimism when projecting public and publicly guaranteed debt ratios (realized ratios are higher than projected). DSAs perform relatively better for Small Islands Developing States. Circumstantial determinants (IMF programmes or recession) deepen optimism biases.