China’s Ministry of Finance has unveiled the Belt and Road Debt Sustainability Analysis Framework (for Market Financing Countries).
The aim of the Framework is to enhance debt management and sustainable financing for countries participating in the Belt and Road initiative. It is a tool formulated on the basis of good international practices and realities of the countries along the Belt and Road. China and financial institutions in other countries in the Belt and Road Initiative are encouraged to use the tool on a voluntary basis.
The Framework, paired with the Framework for low-income countries, provides comprehensive guidance for low- and middle-income countries participating in the Belt and Road Initiative. Its aim is to support more participating countries in the quest for improving debt management, promoting sustainable financing, and realizing sustainable and inclusive growth.
Financing is crucial for the initiative, and the release of this analytical tool is seen as essential to prevent financial risks and promote debt sustainability.
The framework is developed based on international best practices and encourages voluntary use by both China and financial institutions in “Belt and Road” countries. It complements a framework for low-income countries released in 2019, covering low and middle-income countries, offering significant risk prevention and debt sustainability improvements.
Notable innovations include a focus on sovereign debt risk from a development perspective and consideration of both default probability and loss rate in debt risk analysis.
Source: International Institute of Green Finance (IIGF), 31 Oct 2023.