This paper critically assesses the standard IMF analytical framework for debt sustainability in emerging markets. It focuses on complementarities and trade-offs between fiscal and external sustainability, and interactions and feedbacks among policy and endogenous variables affecting debt ratios....

This paper argues that developing countries have limited arsenal at the national level to manage financial instability. The solutions have to be sought mainly at the multilateral level and these include: provision of adequate international liquidity at appropriate terms for current account...