[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-111504-en":3,"doc-seo-111504-105":29,"detail-sidebar-cat-0-en-105":91},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},111504,8796095461564,"Liam","https://ap-avatar.wpscdn.com/davatar_155a257f0dc6eb9ab79c44ca47cae57d",8,"Research & Report","Federated States of Micronesia - Joint Bank-Fund Debt Sustainability Analysis - Moderate Risk Assessment","Federated States of Micronesia remains at moderate risk of debt distress under the Low-Income Country Debt Sustainability Framework (LIC DSF). Mechanical ratings on a 10-year horizon indicate low risk, but the risk becomes moderate on a 20-year horizon because stress tests show natural disaster and export shocks can push the present value of external debt-to-GDP and debt-to-exports beyond thresholds. The analysis notes substantial space to absorb shocks, supported by the Trust Fund and Compact Trust Fund, while stressing that climate adaptation needs require grants and concessional financing rather than domestic resources alone. Strengthening public financial and debt management, including medium-term strategies and climate-resilient investment prioritization, is essential.","Public Disclosure Authorized  \nPub lic Disc losure Authorized  \nApproved by:  \nManuela Francisco and Lalita M. Moorty (IDA) , and Rahul Anand and Cemile Sancak (IMF)  \nPrepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF)1 ,2  \n\n| FEDERATED STATES OF MICRONESIA: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS |  |\n| --- | --- |\n| Risk of external debt distress | Moderate |\n| Overall risk of debt distress | Moderate |\n| Granularity in the risk rating | Substantial space |\n| Application of judgment | Yes: The forecast horizon is extended to 20 years to take account of a continuous upward trajectory of debt indicators in stress tests. |\n\nThe Federated States of Micronesia (FSM) remains at moderate risk of debt distress under the Low-Income Country Debt Sustainability Framework (LIC DSF) . While mechanical ratings on a 10-year horizon indicate low risk, the risk rises to moderate for the 20-year horizon as stress tests show that natural disaster and export shocks could increase the present value (PV) of external debt-to-GDP and debt-to-exports above the threshold. As such, both external and overall debt distress risks are assessed as moderate, with substantial space to absorb shocks. FSM’s Trust Fund and Compact Trust Fund offer strong safeguards for debt repayment and fiscal resilience. However, large climate adaptation needs cannot be met through domestic resources alone without risking debt sustainability, necessitating grants and concessional financing. Strengthening public financial and debt management, including developing medium-term strategies and prioritizing climate-resilient investments, is essential.  \n1 The FSM’s Composite Indicator of 1.76 indicates a weak debt-carrying capacity, based on the October 2025 IMF’s World Economic Outlook (WEO) and the 2024 World Bank’s Country Policy and Institutional Assessment (CPIA) .  \n2 This DSA has been prepared jointly by the IMF and World Bank, following the 2018 Guidance Note on the Bank-Fund Debt Sustainability Framework for Low Income Countries.  \n1. This Debt Sustainability Analysis (DSA) covers debt owed by the national and state governments of the FSM (Text Table 1) . As of September 2025, debt is primarily external and includes guaranteed debt from strategically important state-owned enterprises (SOEs) . The FSM authorities report on both guaranteed and on-lent debt by SOEs in debt bulletins.3 Nevertheless, the coverage of the analysis can be improved by including other elements in the government ([e.g. social](e.g. social) security fund4 ) . There is no non-guaranteed SOE debt. Against this background, the shock for SOE’s debt is set to zero in the contingent liability stress test. There are no Public Private Partnerships (PPP) . The FSM uses the U.S. dollar as the legal tender and does not have a central bank. The external debt is defined based on the residency criteria.  \n| 1 | Subsectors of the public sector | Sub-sectors covered |\n| --- | --- | --- |\n|  | Central government | X |\n| 2 | State and local government | X |\n| 3 | Other elements in the general government |  |\n| 4 | o/w: Social security fund |  |\n| 5 | o/w: Extra budgetary funds (EBFs) |  |\n| 6 | Guarantees (to other entities in the public and private sector, including to SOEs) | X |\n| 7 | Central bank (borrowed on behalf of the government) |  |\n| 8 | Non-guaranteed SOE debt |  |\n\n\n| 1 | The country's coverage of public debt | The central, state, and local governments, government-guaranteed debt |  |  |  |\n| --- | --- | --- | --- | --- | --- |\n|  |  |  | Default | Used for the\u003Cbr>analysis | Reasons for deviations from the default settings |\n| 2 | Other elements of the general government not captured in 1. | 0 | percent of GDP | 0.0 |  |\n| 3 | SoE's debt (guaranteed and not guaranteed by the government) 1/ | 2 | percent of GDP | 0.0 SOEs' debt | guaranteed by the government already included in debt coverage |\n| 4 | PPP | 35 | percent of PPP stock | 0.0 ","cbCaiunCMFzLgpTl","https://ap.wps.com/l/cbCaiunCMFzLgpTl","pdf",980229,1,20,"English","en",105,"# Risk of Debt Distress\n## Overall assessment and horizon effects\n## Stress test drivers and thresholds\n# Debt Coverage and Assumptions\n## Public sector subsectors and guarantees\n## Treatment of SOE debt and PPPs\n## Currency, central banking, and external debt definition\n# Public Debt Coverage Framework\n## Default settings and deviation reasons\n## Shock assumptions and fiscal year basis","[{\"question\":\"Why does the debt distress risk increase from the 10-year to the 20-year horizon?\",\"answer\":\"Low risk at the 10-year mechanical horizon becomes moderate at the 20-year horizon because stress tests indicate natural disaster and export shocks can raise the present value ratios of external debt-to-GDP and debt-to-exports above threshold levels.\"},{\"question\":\"What evidence supports the finding of moderate overall debt distress risk?\",\"answer\":\"Both external and overall debt distress risks are assessed as moderate, with substantial space to absorb shocks. The Trust Fund and Compact Trust Fund are described as providing strong safeguards for debt repayment and fiscal resilience.\"},{\"question\":\"What financing approach is considered necessary for climate adaptation needs?\",\"answer\":\"Large climate adaptation needs cannot be met through domestic resources alone without risking debt sustainability, so grants and concessional financing are required.\"}]",1784490422,50,{"code":4,"msg":30,"data":31},"ok",{"site_id":24,"language":23,"slug":32,"title":13,"keywords":33,"description":14,"schema_data":34,"social_meta":86,"head_meta":88,"extra_data":90,"updated_unix":27},"federated-states-of-micronesia-joint-bank-fund-debt-sustainability-analysis-moderate-risk-assessment","",{"@graph":35,"@context":85},[36,53,68],{"@type":37,"itemListElement":38},"BreadcrumbList",[39,43,47,50],{"item":40,"name":41,"@type":42,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":44,"name":45,"@type":42,"position":46},"https://docshare.wps.com/document/","Document",2,{"item":48,"name":12,"@type":42,"position":49},"https://docshare.wps.com/document/research-report/",3,{"item":51,"name":13,"@type":42,"position":52},"https://docshare.wps.com/document/federated-states-of-micronesia-joint-bank-fund-debt-sustainability-analysis-moderate-risk-assessment/111504/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":23,"description":14,"dateModified":61,"datePublished":62,"encodingFormat":60,"isAccessibleForFree":63,"interactionStatistic":64},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":40,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-20","2026-07-19",true,{"@type":65,"interactionType":66,"userInteractionCount":20},"InteractionCounter",{"@type":67},"ViewAction",{"@type":69,"mainEntity":70},"FAQPage",[71,77,81],{"name":72,"@type":73,"acceptedAnswer":74},"Why does the debt distress risk increase from the 10-year to the 20-year horizon?","Question",{"text":75,"@type":76},"Low risk at the 10-year mechanical horizon becomes moderate at the 20-year horizon because stress tests indicate natural disaster and export shocks can raise the present value ratios of external debt-to-GDP and debt-to-exports above threshold levels.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"What evidence supports the finding of moderate overall debt distress risk?",{"text":80,"@type":76},"Both external and overall debt distress risks are assessed as moderate, with substantial space to absorb shocks. The Trust Fund and Compact Trust Fund are described as providing strong safeguards for debt repayment and fiscal resilience.",{"name":82,"@type":73,"acceptedAnswer":83},"What financing approach is considered necessary for climate adaptation needs?",{"text":84,"@type":76},"Large climate adaptation needs cannot be met through domestic resources alone without risking debt sustainability, so grants and concessional financing are required.","https://schema.org",{"og:url":51,"og:type":87,"og:title":13,"og:site_name":58,"og:description":14},"article",{"robots":89,"canonical":51},"index,follow",{"doc_id":7,"site_id":24},{"code":4,"msg":5,"data":92},[93,97,101,105,110,114,119,122,126,129,133],{"id":20,"doc_module":4,"doc_module_name":45,"category_name":94,"show_sort_weight":95,"slug":96},"Story & Novel",90,"story-novel",{"id":46,"doc_module":4,"doc_module_name":45,"category_name":98,"show_sort_weight":99,"slug":100},"Literature",80,"literature",{"id":52,"doc_module":4,"doc_module_name":45,"category_name":102,"show_sort_weight":103,"slug":104},"Exam",70,"exam",{"id":106,"doc_module":4,"doc_module_name":45,"category_name":107,"show_sort_weight":108,"slug":109},5,"Comic",60,"comic",{"id":111,"doc_module":4,"doc_module_name":45,"category_name":112,"show_sort_weight":28,"slug":113},6,"Technology","technology",{"id":115,"doc_module":4,"doc_module_name":45,"category_name":116,"show_sort_weight":117,"slug":118},7,"Healthcare",40,"healthcare",{"id":11,"doc_module":4,"doc_module_name":45,"category_name":12,"show_sort_weight":120,"slug":121},30,"research-report",{"id":123,"doc_module":4,"doc_module_name":45,"category_name":124,"show_sort_weight":21,"slug":125},9,"Religion & Spirituality","religion-spirituality",{"id":21,"doc_module":4,"doc_module_name":45,"category_name":127,"show_sort_weight":21,"slug":128},"World Cup","world-cup",{"id":130,"doc_module":4,"doc_module_name":45,"category_name":131,"show_sort_weight":130,"slug":132},10,"Lifestyle","lifestyle",{"id":134,"doc_module":4,"doc_module_name":45,"category_name":135,"show_sort_weight":106,"slug":136},19,"General","general"]