Diverging Debt Paths in South Asia: A Cross-Country Analysis of External Debt Relative to IMF Thresholds
DOI:
https://doi.org/10.53983/ijmds.v14n11.002Keywords:
External Debt, SAARC Countries, Debt Sustainability, IMF Threshold, External Debt-to-GDP Ratio, Comparative Analysis, South Asia, Fiscal VulnerabilityAbstract
This study provides a comparative analysis of external debt dynamics in SAARC countries from 2013 to 2023, using the IMF’s 40 percent external debt-to-GDP threshold as a benchmark for assessing debt sustainability. Using secondary data, the paper examines country-wise trends, identifies high-risk and low-risk economies, and evaluates external vulnerabilities across the region. The results show that Afghanistan, Bangladesh, India, and Nepal consistently maintain debt ratios below the 40 percent threshold, indicating a low-risk external debt position. In contrast, Bhutan, Maldives, and Sri Lanka exhibit significantly high debt ratios, placing them in the high-risk category throughout the study period. Pakistan demonstrates a moderate-risk profile, with its debt levels approaching the sustainability threshold in recent years. The analysis highlights the structural, fiscal, and external sector factors driving cross-country differences. Policy implications emphasize the need for improved debt transparency, export diversification, prudent borrowing, and strengthened regional cooperation to ensure long-term debt sustainability in the SAARC region.
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