Reforming the International Monetary Fund’s Debt Sustainability Assessments towards Achieving the UN’s Sustainable Development Goals (SDGs): A Crucial Post-Pandemic Recovery Agenda

Abstract

This article examines the role of the IMF’s Debt Sustainability Assessments (DSAs) in achieving the UN’s Sustainable Development Goals (SDGs), which is a crucial agenda towards a resilient, sustainable, and inclusive post-pandemic recovery. Crucially, it advocates that the DSA should be reformed by de-emphasizing its commitment to austerity. Austerity measures are overwhelmingly associated with the need to guarantee debt service levels through a reallocation of budgetary resources otherwise allocated to public investment and services, typically by means of fiscal adjustment and regressive taxation. This threatens the post-pandemic recovery capacity of vast segments of the global economy and jeopardises the ability of societies to innovate and build capacity towards achieving the SDGs, as well as the state’s ability to ensure the fulfilment of fundamental human rights to its population. This article proceeds as follows. Section 2 explains what the DSA is, as well as its uses and legal framework. Section 3 discusses the importance of the DSA in sovereign debt crises. Section 4 analyses the macroeconomic and legal assumptions of the DSA and critiques their adequacy to achieve the SDGs. Section 5 discusses the legitimacy and accountability issues posed by the DSA. Section 6 concludes this piece with some considerations on the need for reforming the DSA towards a sustainable and resilient post-pandemic recovery for all.