The problem of debt overhang facing a number of low-income countries has received considerable international attention in recent times. The international development community has begun to recognize that options would need to be seriously explored aimed at providing debt relief to those countries where debt is not sustainable. When is debt not sustainable? How does one examine debt sustainability in the broader context of macroeconomic management? This paper builds on the Branson (1990) model of debt sustainability and applies it to a severely indebted low-income country, Ethiopia. It provides a simplified framework where debt sustainability (both domestic and external) is an integral element of macroeconomic stability. Interactions between different policy variables (such as debt, fiscal and interest rate policies), and outcome variables (such as GDP growth), as well as international economic conditions (international interest rates) jointly define if the country is on a sustainable debt path. Equations on debt sustainability can be easily estimated under this framework, and this could be easily estimated for other countries, and in this sense, it provides a good starting point for examining debt sustainability.