Debt: the IMF and the World Bank reform their evaluation framework

The International Monetary Fund (IMF) and the World Bank will review their method of analyzing the debt of low-income countries. This reform, which is due to come into force in the second half of 2027, comes as vulnerabilities remain high in Africa despite a slight decline in the average public debt ratio.

The Debt Sustainability Analysis Framework (Dsf) for low-income countries is set to undergo a major overhaul. On September 15, the World Bank’s Board of Directors approved a reform developed jointly with the International Monetary Fund (IMF). According to a document of which we have received a copy, its entry into force is planned for the second half of 2027. This development aims to adapt the evaluation tool to the transformation of the public debt landscape. Since the previous revision of the framework, in 2017, States have resorted more to domestic debt, while their financing needs have increased in infrastructure, human capital and adaptation to climate change.

The main innovation consists of introducing a module devoted to domestic debt. The objective is to better measure the risks linked to the increase in domestic borrowing, in particular the interactions between public finances and the banking system. This question is particularly important for African economies where domestic financial markets play an increasing role in financing public deficits. A strong mobilization of bank savings by the State can, in fact, modify the financing conditions of the private sector and increase the links between sovereign risk and banking risk. The new framework will also include a module on long-term development needs. 21 African countries at risk It should allow the assessment of the budgetary margin available to finance infrastructure, human capital or even climate adaptation, while measuring the effects of these investments on growth and public finances. The challenge is to go beyond a strictly accounting reading of the debt.

It is more a matter of assessing a country’s capacity to take on debt to invest while maintaining a sustainable financial trajectory. The reform comes in a context where the debt situation remains worrying on the continent. According to the African Development Bank (AfDB), 21 African countries were in a situation of debt distress or at high risk of debt distress in 2025, a number that remains unchanged since 2023. At the same time, the average ratio of public debt to GDP in Africa rose from 63.7% in 2024 to 62.8% at the end of 2025, according to the Institute of International Finance (Iif). This improvement in the continental average, however, masks strong disparities between economies. The new Dsf must also review certain thresholds used to assess debt capacity and better distinguish a risk of debt tensions from an effectively unsustainable debt situation. Simulations and stress tests will be reinforced. The two institutions also want to improve data coverage and transparency on public commitments.

Oumar FÉDIOR