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Linking Social Development with the Capacity to Carry Debt: Towards an MDG-Consistent Debt-Sustainability Concept

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Owing to concerns among low-income countries that the new debt sustainability framework of the Bretton Woods institutions may lock them into a so-called ‘low debt-low growth’ scenario, the United Nations has called for a more MDG-consistent debt-sustainability concept. This article shows that there is a robust relationship between achieving the Millennium Development Goals and having a higher capacity to carry debt. It then discusses options for modifying the current debt-sustainability framework, and suggests that including progress made in achieving the MDGs in determining borrowing limits would be a first step towards adopting such a concept.

Keywords: Debt sustainability; Millennium Development Goals; debt distress

Document Type: Research Article


Affiliations: 1: American University, Washington, DC, and the Bangladesh Development Research Center (BDRC), 2508 Fowler Street, Falls Church, VA 22046-2012 ( ), Email: 2: International Monetary Fund (IMF).

Publication date: May 1, 2009


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