The purpose of the paper is to shed light on the composition of the public sector debt stock and using the end-2002 net public debt stock-to-GNP ratio as the starting point, estimate the primary surplus-to-GNP ratio that will be necessary for the sustainability of the debt stock, using a modified version of the approach suggested by the World Bank (2000:16-18; 121-124). The relevant tables on the primary surplus-to-GNP ratio requirements are constructed under different scenarios with respect to real interest rate, growth rate and inflation rate. At the second stage, the weighted average real interest rate on the current central government debt stock is estimated. Then the debt sustainability issue is evaluated by comparing the estimated primary surplus-to-GNP ratios required with the targeted primary surplus ratio, taking into consideration the real interest rate on the existing stock.
