1. Introduction 1

2. Data 5

  2.1 Measuring external sovereign debt distress 6

    2.1.1 Default 6

    2.1.2 Large IMF balance of payments assistance  9

    2.1.3 Defining external sovereign debt distress episodes 10

    2.1.4 Domestic debt distres 11

  2.2. Predictors of debt distress 12

3.  Predicting debt distress 14

  3.1 Prediction strategy 14

  3.2 Variable selectio 17

  3.3 Predictive performance 18

  3.4 Model selection 24

    3.4.1 Ruling out perverse policy incentives 24

    3.4.2 Data availability 25

    3.4.3 Economically meaningful effect sizes 26

  3.5 Top models 26

  3.6 Robustness 29

4 Model extensions 31

  4.1 Alternative algorithms 31

  4.2 Predicting debt distress five years into the future 33

5. Comparison with the IMF and World Bank LIC DSF 36

6. Conclusion 38