The priority should be to conclude debt restructurings swiftly and to clear paths for the global transfers from rich to poor countries that must take place if the world is to have any chance of reversing global warming and the climatic changes that are an existential threat. The existing restructuring frameworks are adequate for countries above the median score of the Human Development Index (HDI), but the outstanding debt of countries below the median should be written down by a trust fund financed by donations from rich countries. The cost to rich countries would be trivial; the benefit would be to unblock channels for financial flows to the poorest countries that are essential for the success of the global campaign against climate change.
The IMF's Debt Sustainability Analysis (DSA) methodology was developed specifically for the Fund's purposes. However, for small open economies, the sustainability of debt depends on the impact of debt service on the balance of external payments. Debt is not sustainable if the cost of servicing leads to a decline in foreign reserves, all other things being equal.
View the Video on The Global Interdependence Center (GIC).