Review of the Bank-Fund Debt Sustainability Framework for Low Income Countries : Background Note on Engagement with External Stakeholders

Overview & Synopsis

This background note summarizes engagement with external stakeholders conducted by the International Monetary Fund (IMF) and the World Bank (WB) during the review of the Low Income Countries Debt Sustainability Framework (LIC DSF), highlighting how feedback shaped proposed reforms and operational guidance. Engagement since April 2024 encompassed civil society organizations (CSOs), academics, international financial institutions, private sector stakeholders, and representatives of creditor and borrower countries through multiple fora and a formal public consultation in June 2026. CSOs called for more quantitative and transparent signaling of debt risks, integration of development and climate considerations, expanded indicators including domestic debt and liquidity measures, improved data coverage and quality, and stronger realism in forecasts, alongside deeper country engagement and capacity building. The public consultation, which gathered comments from 50 organizations, confirmed broad support for the proposed reforms and particularly welcomed a new domestic debt risk toolkit, a long-term module to integrate climate and development considerations, a debt data confidence flag to encourage transparency, and greater granularity within the high-risk rating. Public Debt Management Offices (PDMOs) supported the reforms and emphasized practical implementation needs, including clearer debt perimeter guidance and tools for liability management and restructuring simulations. The review concludes that stakeholder inputs align with identified areas for improvement and that the proposed changes strengthen predictive accuracy, elevate the assessment of overall public debt risk, better inform sustainability assessments, and structure coverage of long-term risks. Policy changes proposed include refined country heterogeneity measures, an enhanced overall debt risk model with thresholds, a dedicated domestic debt module, a long-term module covering climate and development dynamics, a debt data confidence flag, greater granularity in high-risk ratings, strengthened realism tools, and enhanced guidance on debt perimeter and data quality. Feedback will inform a new Guidance Note and template, with a focus on transparency, capacity support, and practical implementation to ensure the framework remains rigorous, reproducible, and aligned with development and climate objectives.