[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-111099-en":3,"doc-seo-111099-105":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},111099,687197100911,"Himbo","https://ap-avatar.wpscdn.com/avatar/a000239b6f1da00475?x-image-process=image/resize,m_fixed,w_180,h_180&k=1782698725881665579",8,"Research & Report","Republic of the Marshall Islands - Joint Bank-Fund Debt Sustainability Analysis","The Republic of the Marshall Islands’ debt sustainability assessment finds debt as sustainable with moderate risk of external and overall debt distress under the Low-Income Country Debt Sustainability Framework. Baseline gains from renewed Compact of Free Association grants shift 10-year external debt indicators to low risk, but the 20-year horizon remains moderate due to breaches in natural-disaster and extreme-shock stress tests. Public debt-to-GDP is also vulnerable to commodity-price shocks and natural disasters. Key risks include natural-disaster frequency and economic impact, plus uncertainty from innovative and proposed digital sovereign bond financing affecting macro-financial stability.","Public Disclosure Authorized  \nPub lic Disc losure Authorized  \nApproved by:  \nManuela Francisco and Lalita Moorty (IDA) ,  \nand Lamin Leigh and Bergljot Bjornson  \nBarkbu (IMF),  \nPrepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF)  \n\n| REPUBLIC OF THE MARSHALL ISLANDS\u003Cbr>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 | Some space to absorb shocks |\n| Application of judgment | Yes: Judgment is used only for the risk of external debt distress. The forecast horizon is extended to 20 years to take account of a continuous upward trajectory of debt indicators in the stress tests. |\n\nThe Republic of the Marshall Islands’ (RMI) debt is sustainable and assessed to be at moderate risk of debt distress under the Low-Income Country Debt Sustainability Framework (LIC DSF),1 2 improved from the previous high-risk assessment in August 2023. Incorporating the renewal of the Compact of Free Association (Compact) in the baseline, which includes a large increase in U.S. grants to the RMI, leads the mechanical ratings for external debt on a 10-year forecast horizon to indicate low risk. However, the risk of external debt distress is assessed as moderate for the 20-year horizon as the present value (PV) of PPG external debt-to-GDP ratio will breach its threshold in both natural disaster and most extreme shock stress tests. As such, the risk of external debt distress is assessed as moderate, with some space to absorb shocks. The PV of public debt-to-GDP also appears vulnerable to shocks of commodity prices within 10 years and natural disasters within 20 years, while it does not breach the benchmark in the baseline. As a result, the overall risk  \n1 The DSA follows the IMF and World Bank Staff Guidance Note on the Application of the Joint Fund-Bank Debt Sustainability Framework (DSF) for Low Income Countries (LICs) (February 2018) .  \n2 The Composite Indicator (CI) of 1.65 is based on the latest available CI information—April 2025 IMF World Economic Outlook (WEO) and the World Bank’s Country Policy and Institutional Assessment (CPIA) for 2023 indicating a “weak”capacity to carry debt (see ¶13) .  \nof debt distress is also assessed as moderate. This assessment is subject to significant uncertainties, particularly regarding the frequency and economic impact of natural disasters. RMI’s high vulnerability to weather-related natural disasters poses a key risk and calls for integration of climate considerations into budget planning, allotting resources for sizable investment in adaptation infrastructure and post-disaster reconstruction. Meanwhile, it is important to build capacity to improve efficiency of public investment, accompanied by reforms to unlock sustained private sector-led growth, which would help achieve higher sustainable growth and strengthen debt dynamics. In addition, the recently proposed innovative financing projects, if fully implemented and financed through debt, could crowd out investments in needed adaptation capital and raise concerns about debt sustainability. The planned issuance of a digital sovereign bond (tokenized format)(USDM1) presents a major macro-financial risk and uncertainty to the DSA.  \n1. The DSA for the RMI covers both central government debt and government-guaranteed debt  \n(Text Table 1) . The DSA classifies domestic and external debt based on the residency criteria, as the RMI uses the US dollar as its legal tender. The RMI’s debt is entirely denominated in US dollars, and the bulk is held by non-residents, primarily on concessional terms from development partners. Data availability limits debt coverage, especially the lack of timely information on balance sheets for all other subsectors except the central government,3 reflecting capacity constraints that result in long time lags in the preparation of audited ","cbCaiqoTuB1kCnEw","https://ap.wps.com/l/cbCaiqoTuB1kCnEw","pdf",758380,1,22,"English","en",105,"# Risk of Debt Distress\n## External Debt Distress Risk\n## Overall Debt Distress Risk\n# Debt Sustainability Framework Approach\n## Forecast Horizon and Stress Tests\n## Judgment and Data Coverage\n# Public Debt Structure and Coverage\n## Central Government and Guarantees\n## Domestic vs External Debt Residency Criteria\n# Key Risks and Policy Implications\n## Climate Integration and Adaptation Investment\n## Private Investment and Innovative Financing Risks","[{\"question\":\"Why is the risk of external debt distress assessed as moderate over the 20-year horizon?\",\"answer\":\"The present value of the PPG external debt-to-GDP ratio breaches its threshold in natural disaster and most extreme shock stress tests over the 20-year horizon.\"},{\"question\":\"How does the renewal of the Compact of Free Association affect the debt outlook?\",\"answer\":\"Renewing the Compact and increasing U.S. grants improves mechanical ratings for external debt on a 10-year horizon, indicating low risk, even though longer-horizon risks remain.\"},{\"question\":\"What are the main uncertainties highlighted in the assessment?\",\"answer\":\"Uncertainty is significant around the frequency and economic impact of natural disasters, which is central given the country’s high weather-related vulnerability.\"}]",1784488580,55,{"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},"republic-of-the-marshall-islands-joint-bank-fund-debt-sustainability-analysis","",{"@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/republic-of-the-marshall-islands-joint-bank-fund-debt-sustainability-analysis/111099/",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 is the risk of external debt distress assessed as moderate over the 20-year horizon?","Question",{"text":75,"@type":76},"The present value of the PPG external debt-to-GDP ratio breaches its threshold in natural disaster and most extreme shock stress tests over the 20-year horizon.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"How does the renewal of the Compact of Free Association affect the debt outlook?",{"text":80,"@type":76},"Renewing the Compact and increasing U.S. grants improves mechanical ratings for external debt on a 10-year horizon, indicating low risk, even though longer-horizon risks remain.",{"name":82,"@type":73,"acceptedAnswer":83},"What are the main uncertainties highlighted in the assessment?",{"text":84,"@type":76},"Uncertainty is significant around the frequency and economic impact of natural disasters, which is central given the country’s high weather-related 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