[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-111833-en":3,"doc-seo-111833-105":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},111833,962075114765,"Quinn","https://ap-avatar.wpscdn.com/davatar_a8503ba1806abce46bf441b54a3ca4cd",8,"Research & Report","Vanuatu - Joint Bank-Fund Debt Sustainability Analysis - Risk Assessment of Debt Distress","Vanuatu’s joint World Bank–IMF Debt Sustainability Analysis evaluates high risks of both external and overall debt distress under the baseline, with risk ratings remaining high versus the June 2023 DSA. The analysis links deterioration to the liquidation of Air Vanuatu, which raises uncertainty and affects tourism, growth, and public spending. It projects public-debt-to-GDP breaching key thresholds and shows that reduced Economic Citizenship Program revenues can widen fiscal deficits, with stronger threshold breaches under an alternate zero-ECP scenario.","Public Disclosure  \nPub lic Disc losure Authorized  \nApproved by:  \nManuela Francisco and Lalita Moorty (IDA) and Maria Gonzalez and Fabian Bornhorst (IMF)  \nPrepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF)  \n\n| VANUATU: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS |  |\n| --- | --- |\n| Risk of external debt distress | High |\n| Overall risk of debt distress | High |\n| Granularity in the risk rating | Sustainable |\n| Application of judgment | No |\n\nThe voluntary liquidation of the national carrier Air Vanuatu has significantly increased uncertainty around the outlook and fiscal outcomes. The immediate fallout from this development will be on tourism and growth prospects, while the longer term fiscal implications could likely be protracted, accompanied by higher public debt. In addition to lower revenue from tourism receipts and duty fees, staff envisage a mixed picture on capital spending and other expenditures related to the Air Vanuatu liquidation. Under the baseline, the Debt Sustainability Analysis (DSA) concludes that the risk of overall debt distress remains high, similar to the June 2023 DSA, and the PV of public-debt-to-GDP ratio breaches the threshold level of 55 percent from 2033 onwards, a year later than in the previous DSA. The sharp reduction in revenues from the Economic Citizenship Program (ECP) is expected to create a structural fiscal deficit into the medium term, having a significant impact on future fiscal outcomes. Under an alternate scenario with zero ECP revenues, the PV of public-debt-to-GDP breaches the threshold level from 2027 onward.  \nThe risk of external debt distress for Vanuatu has deteriorated to high (from moderate in the previous DSA), as the airline stoppage threatens service exports in the near term. The PV of external debt-to-exports ratio breaches the  \n1 The Composite Indicator (CI) for Vanuatu is estimated at 3.05, based on the April 2024 WEO and 2022 World Bank CPIA; given the CI score in this and previous vintages the debt carrying capacity for Vanuatu is assessed as medium.  \nindicative threshold under the baseline scenario in 2024 and 2025. With the envisaged increase in external debt over the medium term, the PV of external debt-to-GDP breaches the threshold level of 40 in the later years (2033-34) .  \nPublic debt is deemed sustainable given the breaches are marginal and in the later years for external debt indicators. The sustainability of public debt hinges to a large extent on the success of the Air Vanuatu restructuring, to restore its commercial viability for domestic operations, the government’s sustained ability to access highly concessional external loans, and it is anchored in the assumption of a gradually declining deficit. The deteriorating debt profile, and the high risk ratings in particular, highlights the urgent need for continued fiscal consolidation beyond what is assumed in the baseline scenario, strengthening debt management strategies and enhancing resilience against future shocks to ensure fiscal sustainability.  \n1. The coverage of public sector debt for this debt sustainability analysis has changed from the DSA update in June 2023, in light of the liquidation of Air Vanuatu on May 10, 2024. The debt stock covers the central government, central government guaranteed debt and central bank debt borrowed on behalf of the government. Given the high likelihood that the government will take over Air Vanuatu’sliabilities, a significant portion of the debt owed by Air Vanuatu to creditors has now been accounted for within public debt (see details in the Box below) . Because of data limitations, non-guaranteed SOE debt and private external debt are not included in the analysis.2 However, a contingent liability scenario for the SOEs is considered (see below) . The DSA uses a residency-based definition of external debt.  \n\n|  |  |  |\n| --- | --- | --- |\n|  | 1\u003Cbr>2\u003Cbr>3\u003Cbr>4\u003Cbr>5\u003Cbr>6\u003Cbr>7\u003Cbr>8 | Subsectors ","cbCaimR8OM8VKlbS","https://ap.wps.com/l/cbCaimR8OM8VKlbS","pdf",653065,1,22,"English","en",105,"# Risk assessment of debt distress\n## External debt distress and export service effects\n## Overall debt distress under baseline and alternate scenarios\n## Public debt sustainability drivers and policy needs\n## Coverage, debt definitions, and changes since June 2023\n## Contingent liabilities stress test and key assumptions","[{\"question\":\"What does the joint DSA conclude about Vanuatu’s risk of debt distress?\",\"answer\":\"The analysis concludes that the risk of both external debt distress and overall debt distress is high.\"},{\"question\":\"How does Air Vanuatu’s liquidation affect the debt outlook?\",\"answer\":\"The liquidation increases uncertainty around fiscal outcomes and threatens service exports in the near term, contributing to worse external-debt distress risk.\"},{\"question\":\"What role does the Economic Citizenship Program play in the projected fiscal deficit?\",\"answer\":\"A sharp reduction in ECP revenues is expected to create a structural fiscal deficit in the medium term, worsening debt sustainability and triggering threshold breaches under the alternate zero-ECP scenario.\"}]",1784491917,55,{"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},"vanuatu-joint-bank-fund-debt-sustainability-analysis-risk-assessment-of-debt-distress","",{"@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/vanuatu-joint-bank-fund-debt-sustainability-analysis-risk-assessment-of-debt-distress/111833/",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},"What does the joint DSA conclude about Vanuatu’s risk of debt distress?","Question",{"text":75,"@type":76},"The analysis concludes that the risk of both external debt distress and overall debt distress is high.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"How does Air Vanuatu’s liquidation affect the debt outlook?",{"text":80,"@type":76},"The liquidation increases uncertainty around fiscal outcomes and threatens service exports in the near term, contributing to worse external-debt distress risk.",{"name":82,"@type":73,"acceptedAnswer":83},"What role does the Economic Citizenship Program play in the projected fiscal deficit?",{"text":84,"@type":76},"A sharp reduction in ECP revenues is expected to create a structural fiscal deficit in the medium term, worsening debt sustainability and triggering threshold breaches under the alternate zero-ECP 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