Public Debt: A Primer for Development Practitioners
Source: USAID | Year: 2022
The many issues surrounding public debt are complex. Debt is an important policy tool that helps countries address several objectives. But managing indebtedness in a prudent manner requires limiting the vulnerabilities that arise with the use of debt; otherwise, countries can end up with insurmountable debt burdens that ultimately impede development progress.
With the stakes so high, debt management is a critical area of policy that any government would want to “get right;” this means achieving a proper balance between the benefits and the costs of debt while managing the risks involved effectively.
This primer covers key concepts and tools that are central to public debt theory and practice. Development stakeholders can use the contents of this primer to put the proper emphasis on public debt developments in their analysis and advice, and to understand appropriate roles that USAID and other partners can play. An improved ability to detect early warnings of debt vulnerabilities can help governments take timely and effective measures to mitigate risks, including productive approaches to debt restructuring. Good international practice derived from past cases will inform the discussion.
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