We construct a public debt risk matrix that
ranks countries with respect to the risks stemming from debt levels
as well as from debt structures. In Chapter 3 we use our new
scenario framework, which explicitly takes a government‟s debt
structure into account, to project public debt dynamics over the next
ten years. In the baseline scenario we assume a policy of fiscal
consolidation, with the consolidation pace varying across countries.
In the “no-policy-change” scenario we project the debt levels that
could be reached by 2020 in the absence of consolidation.
Moreover, we calculate “shock” scenarios which are characterised
by a more challenging economic and financial environment, as e.g.
by lower GDP growth or higher market interest rates.

Publish Date:
DB Research (Deutsche Bank)

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