[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-111122-en":3,"doc-seo-111122-105":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},111122,687197100911,"Himbo","https://ap-avatar.wpscdn.com/avatar/a000239b6f1da00475?x-image-process=image/resize,m_fixed,w_180,h_180&k=1782698725881665579",8,"Research & Report","Vanuatu - Joint Bank-Fund Debt Sustainability Analysis","Vanuatu’s debt outlook remains highly sensitive amid continued uncertainty following a December 2024 earthquake and the restructuring of the national airline. Under baseline forecasts, the overall risk of debt distress stays high, with the PV of public debt-to-GDP breaching the indicative benchmark from 2032 onward. External debt distress eases to moderate as tourism recovery and creditor agreements mitigate extremes. Alternative assumptions, including zero ECP revenues, trigger earlier and broader threshold breaches, while the public debt is still assessed as sustainable but fiscal buffers must be rebuilt.","Public Disclosure Authorized  \nPub lic Disc losure Authorized  \nApproved by:  \nManuela Francisco and Lalita Moorty (IDA) , and Maria Gonzalez and Jacques Alain Miniane (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 | Moderate |\n| Overall risk of debt distress | High |\n| Granularity in the risk rating | Sustainable; Limited space to absorb shocks |\n| Application of judgment | No |\n\nWhile Vanuatu is recovering following a devastating earthquake in December 2024 and the restructuring of the national carrier Air Vanuatu, significant uncertainty continues to cloud the outlook. Both shocks have affected tourism and growth prospects, with likely protracted fiscal implications, accompanied by higher public debt. In addition to lower tourism-related revenue, staff envisages a mixed picture on capital spending and other expenditures to support therestructured Air Vanuatu’s continued operations. Under a baseline set of forecasts, the Debt Sustainability Analysis (DSA) concludes that the overall risk of debt distress remains high, similar to the June 2024 DSA, and the PV of public debt-to-GDP ratio breaches its indicative benchmark from 2032 onwards, a year earlier than in the previous DSA, and remains marginally over the threshold.  \nThe risk of external debt distress for Vanuatu has eased to moderate (from high in the previous DSA), as the creditors’agreement for the national airline and the ongoing recovery in tourism has helped avert extreme outcomes2. The external debt indicators do not breach the threshold levels in the baseline and the external debt profile has shifted lower as external borrowing has shifted away from loans and into grants in the near-term.  \n1 The Composite Indicator (CI) for Vanuatu is estimated at 3 .018, based on the April 2025 WEO and 2024 World Bank CPIA; given the CI score in this and previous vintages the debt carrying capacity for Vanuatu is assessed as medium.  \n2 The near-term outlook is subject to significant uncertainties regarding the recovery in tourism following the liquidation of Air Vanuatu and the devastating earthquake in December 2024. Details on the assumptions around tourism are listed in Annex 1 (Near-Term Growth Assumptions) of the Staff Report.  \nIn the alternative scenario with zero ECP revenues, the PV of public debt-to-GDP breaches the benchmark level from 2027 onwards, while the PV of external debt-to-GDP breaches the threshold from 2028 onwards. External debt-toexports ratio breaches the threshold from 2030 onwards while external debt service-to-exports ratio breaches the threshold in 2034.  \nGiven the improvements in the external debt profile and the breach in the benchmark public debt indicator being marginal, Vanuatu’s public debt is deemed sustainable, unchanged from the previous DSA. However, uncertainty around the future outcomes for Air Vanuatu remain and the fiscal outlook remains precarious reflecting persistently large fiscal deficits over the medium term. Thus, there remains an urgent need to rebuild fiscal buffers and enhance resilience against future shocks to ensure fiscal sustainability. Accelerating the pace of structural reforms, with respect to public financial management and the governance of government-business enterprises, as well as revenue mobilization (including a wider tax base and possibly income tax) and expenditure rationalization should remain a priority to ensure positive fiscal outcomes.  \n1. The coverage of public sector debt for this debt sustainability analysis is unchanged from the June 2024 DSA. The debt stock covers the central government, central government guaranteed debt and central bank debt borrowed on behalf of the government. Because of data limitations, non-guaranteed SOE debt and private external debt are not included in the analysis.3 However, a contingen","cbCaigmZaoBv5XHU","https://ap.wps.com/l/cbCaigmZaoBv5XHU","pdf",1720537,1,24,"English","en",105,"# Risk assessment and baseline results\n## External debt distress\n## Public debt sustainability and benchmarks\n# Alternative scenario stress tests\n## Zero ECP revenues\n## External debt indicators and ratios\n# Contingent liabilities and coverage\n## Public sector debt coverage scope\n## SOE contingent liabilities stress test\n# Policy implications","[{\"question\":\"What is the overall risk of debt distress for Vanuatu under the baseline?\",\"answer\":\"The overall risk of debt distress remains high. The analysis indicates the PV of public debt-to-GDP breaches the indicative benchmark from 2032 onward, similar to the prior DSA but one year earlier.\"},{\"question\":\"Why has the risk of external debt distress eased to moderate?\",\"answer\":\"The external debt distress risk eases because creditor agreements for the national airline and ongoing recovery in tourism help avert extreme outcomes. External borrowing also shifts toward grants rather than loans in the near term.\"},{\"question\":\"What happens in the alternative scenario with zero ECP revenues?\",\"answer\":\"With zero ECP revenues, the PV of public debt-to-GDP breaches the benchmark from 2027 onward, and the PV of external debt-to-GDP breaches the threshold from 2028 onward. Additional external ratios breach thresholds in later years.\"}]",1784488701,60,{"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","",{"@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/111122/",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 is the overall risk of debt distress for Vanuatu under the baseline?","Question",{"text":75,"@type":76},"The overall risk of debt distress remains high. The analysis indicates the PV of public debt-to-GDP breaches the indicative benchmark from 2032 onward, similar to the prior DSA but one year earlier.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"Why has the risk of external debt distress eased to moderate?",{"text":80,"@type":76},"The external debt distress risk eases because creditor agreements for the national airline and ongoing recovery in tourism help avert extreme outcomes. External borrowing also shifts toward grants rather than loans in the near term.",{"name":82,"@type":73,"acceptedAnswer":83},"What happens in the alternative scenario with zero ECP revenues?",{"text":84,"@type":76},"With zero ECP revenues, the PV of public debt-to-GDP breaches the benchmark from 2027 onward, and the PV of external debt-to-GDP breaches the threshold from 2028 onward. Additional external ratios breach thresholds in later years.","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},[93,97,101,105,109,114,119,122,127,130,134],{"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":28,"slug":108},5,"Comic","comic",{"id":110,"doc_module":4,"doc_module_name":45,"category_name":111,"show_sort_weight":112,"slug":113},6,"Technology",50,"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":125,"slug":126},9,"Religion & Spirituality",20,"religion-spirituality",{"id":125,"doc_module":4,"doc_module_name":45,"category_name":128,"show_sort_weight":125,"slug":129},"World Cup","world-cup",{"id":131,"doc_module":4,"doc_module_name":45,"category_name":132,"show_sort_weight":131,"slug":133},10,"Lifestyle","lifestyle",{"id":135,"doc_module":4,"doc_module_name":45,"category_name":136,"show_sort_weight":106,"slug":137},19,"General","general"]