Gross Financing Needs — dk

Computes gross financing needs (GFN) as a share of GDP over a projection horizon. GFN represents the total amount of new borrowing a government requires each year to cover its primary deficit, interest payments, and maturing debt:

Usage

dk_gfn(debt, interest_rate, maturity_profile, primary_balance, horizon = 5)

Arguments

debt: Numeric scalar. Initial debt-to-GDP ratio.
interest_rate: Numeric scalar or vector of length horizon. Effective nominal interest rate on government debt.
maturity_profile: Numeric vector or scalar. If a vector, gives the share of GDP maturing in each year of the horizon. If a scalar, interpreted as the average maturity in years; debt is assumed to mature uniformly at debt / maturity_profile per year.
primary_balance: Numeric scalar or vector of length horizon. Primary balance as a share of GDP (positive = surplus).
horizon: Integer scalar. Projection horizon in years. Default 5.

Value

A data.frame with columns:

year: Year index (1 to horizon).
primary_deficit: Primary deficit (negative of primary balance).
interest_payments: Interest payments as a share of GDP.
maturing_debt: Maturing debt as a share of GDP.
gfn: Total gross financing needs as a share of GDP.

Details

$$GFN_t = -pb_t + r_t \cdot d_t + m_t$$

where $pb$ is the primary balance (positive = surplus), $r$ is the effective interest rate, $d$ is debt-to-GDP, and $m$ is maturing debt as a share of GDP.

References

International Monetary Fund (2013). Staff Guidance Note for Public Debt Sustainability Analysis in Market-Access Countries. IMF Policy Paper.

Examples

# Scalar average maturity of 7 years
dk_gfn(debt = 0.90, interest_rate = 0.03,
       maturity_profile = 7, primary_balance = -0.02)
#> 
#> ── Gross Financing Needs (% of GDP) 
#> 
#>   Year      Deficit   Interest   Maturing        GFN 
#> ---------------------------------------------------- 
#>   1            2.0%       2.7%      12.9%      17.6%
#>   2            2.0%       2.8%      12.9%      17.7%
#>   3            2.0%       3.0%      12.9%      17.8%
#>   4            2.0%       3.1%      12.9%      18.0%
#>   5            2.0%       3.3%      12.9%      18.1%

# Explicit maturity profile
dk_gfn(debt = 0.90, interest_rate = 0.03,
       maturity_profile = c(0.15, 0.12, 0.10, 0.08, 0.05),
       primary_balance = -0.02)
#> 
#> ── Gross Financing Needs (% of GDP) 
#> 
#>   Year      Deficit   Interest   Maturing        GFN 
#> ---------------------------------------------------- 
#>   1            2.0%       2.7%      15.0%      19.7%
#>   2            2.0%       2.8%      12.0%      16.8%
#>   3            2.0%       3.0%      10.0%      15.0%
#>   4            2.0%       3.1%       8.0%      13.1%
#>   5            2.0%       3.3%       5.0%      10.3%