Sovereign Debt Vulnerabilities in Asia and the Pacific

ASIAN DEVELOPMENT BANKASIAN DEVELOPMENT BANK6 ADB Avenue, Mandaluyong City1550 Metro Manila, Philippineswww.adb.orgSovereign Debt Vulnerabilities in Asia and the PacificDebt ratio projections and heat maps in this paper show evidence of widening pockets of vulnerability across much of Asia and the Pacific. While the outlook is not yet suggestive of a widespread debt meltdown looming in the region, the global environment presents major challenges. Obstacles to economic growth and rising borrowing costs risk jeopardizing countries’ efforts toward restoring public finances and ensuring their sustainability after a series of major crises. Countries in or close to distress face complications from a complex creditors landscape. About the Asian Development BankADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members —49 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.SOVEREIGN DEBT VULNERABILITIES IN ASIA AND THE PACIFICBenno Ferrarini, Suzette Dagli, and Paul MarianoADB ECONOMICSWORKING PAPER SERIESNO. 680April 2023 ASIAN DEVELOPMENT BANKADB Economics Working Paper SeriesSovereign Debt Vulnerabilities in Asia and the PacificBenno Ferrarini, Suzette Dagli, and Paul MarianoNo. 680 | April 2023Benno Ferrarini (bferrarini@adb.org) is a principal economist; Suzette Dagli (sdagli@adb.org) is an economics officer; and Paul Mariano (pmariano.consultant@adb.org) is a consultant at the Economic Research and Regional Cooperation Department, Asian Development Bank.The ADB Economics Working Paper Series presents research in progress to elicit comments and encourage debate on development issues in Asia and the Pacific. The views expressed are those of the authors and do not necessarily reflect the views and policies of ADB or its Board of Governors or the governments they represent. Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)© 2023 Asian Development Bank6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, PhilippinesTel +63 2 8632 4444; Fax +63 2 8636 2444www.adb.orgSome rights reserved. Published in 2023.ISSN 2313-6537 (print), 2313-6545 (electronic)Publication Stock No. WPS230124-2DOI: http://dx.doi.org/10.22617/WPS230124-2The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent.ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned.By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) https://creativecommons.org/licenses/by/3.0/igo/. By using the content of this publication, you agree to be bound by the terms of this license. For attribution, translations, adaptations, and permissions, please read the provisions and terms of use at https://www.adb.org/terms-use#openaccess.This CC license does not apply to non-ADB copyright materials in this publication. If the material is attributed to another source, please contact the copyright owner or publisher of that source for permission to reproduce it. ADB cannot be held liable for any claims that arise as a result of your use of the material.Please contact pubsmarketing@adb.org if you have questions or comments with respect to content, or if you wish to obtain copyright permission for your intended use that does not fall within these terms, or for permission to use the ADB logo.Corrigenda to ADB publications may be found at http://www.adb.org/publications/corrigenda.Notes: In this publication, “$” refers to United States dollars. ADB recognizes “China” as the People’s Republic of China, “Laos” as the Lao People’s Democratic Republic, and “Russia” as the Russian Federation.The ADB Economics Working Paper Series presents data, information, and/or findings from ongoing research and studies to encourage exchange of ideas and to elicit comment and feedback about development issues in Asia and the Pacific. Since papers in this series are intended for quick and easy dissemination, the content may or may not be fully edited and may later be modified for final publication. CONTENTSTABLES, FIGURES, AND BOXES ivABSTRACT vI. RISING DEBT AMID THREE GLOBAL CRISES 1II. PUBLIC DEBT BASELINE PROJEC