Approach Paper - The World Bank’s Role in and Use of the Low-Income Country Debt Sustainability Framework - Report to the Board from the Committee on Development Effectiveness - Meeting of May 9, 2022

Jul 19, 2026

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Board committee discussion on the Approach Paper concerning how the World Bank will use the Low-Income Country Debt Sustainability Framework (LIC-DSF). Focus covers evaluating whether the framework is well-specified and calibrated to support the Bank’s twin goals and how it fits the operating model, with attention to SDG and Paris Agreement commitments. Members stress balancing evaluation depth, breadth, and timeliness, reflect on climate and data quality, optimism bias, IMF coordination, and requested scope items such as subnational debt and client feedback.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages1

Reading Time3 min

Approach Paper and Committee Review Context

Relevance to the upcoming IMF–WB joint Review

Evaluation scope, framework calibration, and operating model fit

Reflections on SDGs, climate, data quality, and optimism bias

Coordination with IMF and handling of mandate boundaries

Requested analysis: future trends and country-level impacts

Subnational entities and contingent liabilities

Public Disclosure Authorized Public Disclosure Authorized Approach Paper The World Bank’s Role in and Use of the Low-Income Country Debt Sustainability Framework Report to the Board from the Committee on Development Effectiveness ∗ Meeting of May 9, 2022 The Committee on Development Effectiveness met to consider the Approach Paper-The World Bank’s Role in and Use of the Low-Income Country Debt Sustainability Framework (CODE2022-0017) . CODE welcomed the opportunity to discuss the Approach Paper (AP) and highlighted the relevance of finalizing the proposed evaluation in time to provide inputs to the upcoming joint IMF-WB Review of the Low-Income Country Debt Sustainability Framework (LIC-DSF) planned for FY23 . Acknowledging the need to rely on a credible Framework to address debt issues, the Committee noted their appreciation for IEG’s efforts to accommodate CODE’s request to undertake the evaluation within its current work program. CODE and Management noted the importance of having a robust evaluation ofthe LIC DSF that considershow well-specified and calibrated is the Framework for supporting the Bank's twin goals and to assess how well it serves as a key part of the Bank's operating model. Some members noted that countries’commitments such as the SDGs and the Paris Agreement need to be better reflected in the assessment of debt sustainability. However, members agreed with the need to balance the depth, breadth and timeliness of the evaluation, noting that the focus within IEG's institutional mandate on how the WB contributes to the LIC-DSF, uses the Framework’s outputs in various corporate and country-level decisions and could better leverage the LIC-DSF to address debt vulnerabilities in LICs would provide useful inputs for the design and substance of the forthcoming joint review. While emphasizing that, as a co-owner ofthe LICDSF, the WB should be able to evaluate the framework in its entirety, Management acknowledged that mandate boundaries and the time available for the evaluation might limit the feasibility of a broader scope of the evaluation. IEG clarified that it would not be able to assess the accuracy of longer-term projections given that the Framework has only been in place since 2017 but noted it would compare long-term forecasts with historical performance to assess whether projections deviate from past performance. Members appreciated IEG’s commitment to assess the extent to which climate considerations are explicitly addressed in the articulation of long-term projections, how DSAs recognize problems in data quality and coverage and how often and how well the Bank and the Fund coordinate and resolve their differences on the LIC-DSF, particularly to counter optimism bias. Some asked Management about its plan to delineate the joint review with the IMF, including whether the joint review would include some of the elements left out of the IEG evaluation. Alluding to the pandemic and the war in Ukraine, some asked IEG ifit planned to look at future trends in interest rates and disruption in supply chains. They encouraged IEG to also assess how DSA work has informed operations in the country level in terms of structural debt reforms, portfolio reorientation and cancellation of projects; incorporate client countries and other stakeholder feedback; show the changing structure and composition of debt towards commercial and non-Paris Club creditors; ensure regional and country diversity on a comprehensive sample of case studies; look at whether LIC DSAs have been used consistently across country teams to inform operations; assess the efficiency of these reforms against the current increased external borrowing of IDA-eligible countries; and, the influence of consumption-fueled growth on the DSA and how to better differentiate this moving forward. While acknowledging that a joint IEG-IEO assessment was not possible at this time members underscored the importance for IEG to maintain a close dialogue wit

FAQs

What is the purpose of the Approach Paper discussed by the Committee on Development Effectiveness?

The Committee considered the Approach Paper on the World Bank’s role in and use of the LIC-DSF, focusing on how the framework will be evaluated to inform a forthcoming joint IMF-WB review.

How did members view the evaluation framework for debt sustainability?

Members emphasized the need for a credible LIC-DSF and requested that the assessment better reflect commitments such as the SDGs and the Paris Agreement, while balancing depth, breadth, and timeliness.

What topics did members ask IEG to examine during the evaluation?

Members asked for assessment of climate considerations in long-term projections, DSA data quality and coverage, IMF coordination to address optimism bias, and how DSA work informs operations including structural debt reforms and debt composition shifts. They also encouraged consideration of client and stakeholder feedback and regional/country diversity in case studies.

Jul 19, 2026

Upload by Violet