erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, 40477 Düsseldorf

The Case of Grenada

Buenos-Aires March 19th 2014

Over-indebted at first sight

• Public debt to GDP end-2012 stood at 110%• Public Debt Service due in 2013 is41% of total public expenditure or

slightly more than 100% of total non-grants revenue.• Grenada is considered as being at “high risk of debt distress” under

the regular IMF assessment, • With only 22% of all public debt being domestic Grenada is

relatively more indebted to external creditors than peers such as Jamaica

• Debt stock to exports has been around 300% ever since 2008. Total external debt service to exports has been kept below 15% until 2011 because of the strong average grant element of the external debt stock. In 2012 it jumped to over 20%.

erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, 40477 Düsseldorf

The Options• Benchmarks derived from historical

experiences– HIPC and DSA thresholds

• Considering the debt-growth nexus• A successful debt reduction: The London

debt Accord of 1953• Factoring in development finance priorities• Considering specific Vulnerabilities

erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, 40477 Düsseldorf

Results Overview

erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, 40477 Düsseldorf

Concept Indicator Actual level 2012 Sustainable Level Suggested debt reduction in %

HIPC-Comparability EDT/XGS 327.6% 150% 48%

Debt Sustainability Framework

TDS/XGS 20.1 % 15% 25%

Debt Sustainability Framework

Public Debt Service /Revenue

39.8% 20% 50%

London Debt Accord TDS/XGS 20.1% 3.4% 84%

“Natural Debt Limit” Public Debt / GNI 101.2% 6.3% 95%

Debt-Growth Nexus acc. to Greenidge et alia

Public Debt / GNI, maximum marginal growth effect

110.1% 30% 73%

Debt-Growth Nexus acc. to Greenidge et alia

Public Debt / GNI tipping point

110.1% 55% 50%

Debt Growth Nexus acc. to Reinhard/Rogoff

EDT/GNI 75.1 60% 25%

ECCB Indicative threshold

Public Debt/GNI 110.1% 60% 45%

Vulnerabilities

erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, 40477 Düsseldorf

You never know, how much is enough – unless you

know how much is more than enoughWilliam Blake: The Marriage of Heaven and Hell

erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, 40477 Düsseldorf