Participation in the Public Consultation on the Review of the LIC-DSF

The Global Coalition for Social Protection Floors (GCSPF) participated in the public consultation on the 2026 review of the IMF–World Bank Debt Sustainability Framework for Low-Income Countries (LIC-DSF), which assesses debt vulnerabilities and informs policy and lending decisions.

In December 2025, the GCSPF submitted its contribution to the IMF and World Bank review of the debt sustainability framework for low-income countries, highlighting the importance of aligning debt sustainability assessments with countries' commitments to achieve universal social protection and other sustainable development objectives. Read the GCSPF note here.

For more information about the review, including background materials and the full set of consultations questions, visit the IMF website.

1. Excessive fiscal consolidation

At present, it is a major concern that several LIC governments are repaying their debt at the expense of upholding core government functions and development commitments, such as paying salaries to publicly employed teachers and health workers, and upholding pension commitments. Failure to upholding such commitments should be regarded as excessive fiscal consolidation and an indication that the second part of the definition of debt sustainability is not fulfilled: “the debt levels be consistent with preserving growth at a satisfactory level while making adequate progress towards the authorities' development goals.”

2. Domestic arrears

Regardless of whether “excessive fiscal consolidation” will be acknowledged and assessed, it is an important step forward that “government outlays” now count as a debt stress event (footnote 6). However, it is unclear whether “government outlays” includes arrears on civil servants’ salaries and social protection payments. We strongly recommend that such arrears are included – and that, in case there is not sufficient data for the time being, IMF and World start collecting this data.

3. Fiscal multipliers

In the section on Realism Tools, it is noted that “consistency checks between fiscal adjustment and growth based on plausible fiscal multipliers” will be retained and updated.As fiscal multipliers may impact the analysis to a significant degree – and they vary between different sectors and geographical contexts – it is important that the choice of multiplier is fully transparent in each analysis.

4. We strongly welcome the long-term modules, and see the possibility to model the impact of planned policy changes over the medium-to-long term as a very useful option. “Where the authorities are considering changes to baseline policies, country teams would have the option of using the long-term module to model alternative policy scenarios in the first ten years of the forecast period.”

While we note that the climate module is more advanced, we encourage further work on the development module. As investments in “development” is an extremely broad category, it is important to distinguish between different forms of investments, and corresponding fiscal multipliers. It should be recognised that social spending tends to have high multiplier effects. As recognised in IMF’s strategy for engagement on social spending, social spending plays an important role in promoting sustained and inclusive growth. A recent study of 42 countries found that the average cumulative multiplier of public spending on social protection is 1.84, and that the positive impact on GDP is significantly larger than that for total government expenditures, and is especially pronounced in countries characterized by higher inequality.[4] Further, the study finds that countries with smaller social protection programs tend to experience higher multipliers when social spending increases.

Ref: Cardoso, D., Carvalho, L., Lima, G.T., Nassif-Pires, L., Rugitsky, F. and Sanches, M. (2025), The Multiplier Effects of Government Expenditures on Social Protection: A Multi-country Study. Dev Change, 56: 172-224. https://doi.org/10.1111/dech.12869

We recommend that further work on the development module is made – in cooperation with ILO and other expert institutions. We would also like to draw a specific data base to your attention, which can be useful in constructing different policy scenarios. The Social protection financing gap tool - Development Pathways: A DT Global Company, (Social protection financing gap tool - Development Pathways: A DT Global Company) developed with the support of Act Church of Sweden, projects the cost of additional investments (terms of GDP per capita) to implement, over time, universal access to up to five basic social benefits.

5. Increase transparency – publish the debt sustainability analyses, [also as drafts]. National ownership is crucial for successful implementation of fiscal policies adopted as a response to IMF advise or as conditions in IMF programs. Thorough discussion of the debt sustainability assessment in the parliament and in the media will increase the quality and ownership of the government’s decisions on fiscal policy. The IMF is encouraged to consult with civil society, and the conversation could include a reaction to a DRAFT debt sustainability assessment, allowing use of the tool to test alternative scenarios.

Too short deadline. While we appreciate the previous opportunities to give input to the review, we regret that civil society organisations get the chance to see and respond to a written draft very late in the review process, and with a very tight deadline.