Cross-Country Experience with Restructuring of Sovereign Debt and Restoring Debt Sustainability

Policy Papers ◽  
2006 ◽  
Vol 2006 (49) ◽  
Author(s):  
Keyword(s):  
Sovereign Debt ◽  
Debt Relief ◽  
Economic Conditions ◽  
Stress Tests ◽  
Debt Sustainability ◽  
Cross Country

The paper is organized as follows: Section II provides a cross-country overview of the economic conditions, including the composition of sovereign debt and its dynamics prevailing prior to the debt operations, and a discussion of the scope and outcomes—in terms of the debt relief provided by creditors—of the debt restructurings. Section III analyzes the debt profile, liquidity position, DSAs and accompanying stress tests, and an EWS to assess whether debt sustainability has been restored in each country case. Conclusions are set out in Section IV.

Risk Management Optimization for Sovereign Debt Restructuring

2015 ◽  
Vol 6 (2) ◽  
Author(s):  
Andrea Consiglio ◽  
Stavros A. Zenios
Keyword(s):  
Risk Management ◽  
Scenario Analysis ◽  
Sovereign Debt ◽  
Risk Measure ◽  
Policy Tools ◽  
Debt Restructuring ◽  
Tail Risk ◽  
Debt Sustainability ◽  
Scenario Optimization ◽  
Management Optimization

AbstractDebt restructuring is one of the policy tools available for resolving sovereign debt crises and, while unorthodox, it is not uncommon. We propose a scenario analysis for debt sustainability and integrate it with scenario optimization for risk management in restructuring sovereign debt. The scenario dynamics of debt-to-GDP ratio are used to define a tail risk measure, termed

scholarly journals Somalia

2020 ◽  
Vol 20 (86) ◽  
Author(s):  
Keyword(s):  
Low Income ◽  
Net Present Value ◽  
Debt Relief ◽  
Debt Management ◽  
Policy Framework ◽  
Low Income Countries ◽  
Debt Sustainability ◽  
Poor Countries ◽  
Heavily Indebted Poor Countries ◽  
Hipc Initiative

This paper presents an assessment of Somalia’s eligibility for assistance under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The macroeconomic framework reflects the policy framework underlying the proposed three-year Fund-supported program. The debt relief analysis (DRA) remains largely unchanged, but some of the underlying debt data has been updated to reflect new information from creditors. In addition, this paper presents an assessment of debt management capacity in Somalia and a full Debt Sustainability Analysis under the Debt Sustainability Framework for Low-Income Countries. The DRA reveals that, after traditional debt relief mechanisms are applied, Somalia’s debt burden expressed as the net present value of debt-to-exports ratio is 344.2 percent at the end of December 2018—significantly above the HIPC Initiative threshold. Despite the challenging environment, progress on reform and policy implementation has been good and sustained reforms have translated into economic results. In addition to the coordinated support from the World Bank and the IMF, reforms have been supported by other development partners.

Sovereign Debt Crises

2018 ◽  
pp. 28-44
Author(s):  
Rosa María Lastra ◽  
Vassilis Paliouras
Keyword(s):  
Financial Institutions ◽  
Sovereign Debt ◽  
Debt Relief ◽  
Debt Management ◽  
International Financial Institutions ◽  
Economic Adjustment ◽  
Underlying Causes ◽  
Debt Crises ◽  
Debt Repayment

Creditor responses to sovereign debt crises suggest that they view such crises as problems of debt management on the part of the countries facing debt repayment difficulties. Thus, for example, debt relief and restructuring mechanisms coordinated by the international financial institutions place emphasis on correcting perceived imprudent debt management through a series of economic adjustment measures. Little attention, if any, is paid to addressing the underlying causes of the debt crises. This chapter examines the various causes of sovereign debt crises and the role that debt management plays in their eruption or in addressing them in a sustainable manner.

Restructuring Euro Area Sovereign Debt: Have the Options Narrowed?

2020 ◽  
Vol 6 (1) ◽  
pp. 125-147
Author(s):  
W Mark C Weidemaier
Keyword(s):  
Human Rights ◽  
Euro Area ◽  
Sovereign Debt ◽  
Debt Relief ◽  
European Convention ◽  
Debt Restructuring ◽  
European Stability Mechanism ◽  
Local Law ◽  
The Law ◽  
Legal Constraints

ABSTRACT This article examines the intersection between two key attributes of sovereign debt governance in the Euro Area. First, sovereigns mostly issue bonds governed by their own law. This ‘local law advantage’ should make debt restructuring comparatively easy, as the sovereign can change the law to reduce its debt. The second attribute is the so-called ‘Euro CAC’, which is a contract-based restructuring mechanism mandated by the Treaty Establishing the European Stability Mechanism (the ESM Treaty). The Euro CAC lets a bondholder supermajority approve a restructuring and bind dissenters. Since 2013, nearly all Euro Area sovereign debt has included the clause. Many believe the ESM Treaty requires governments to use the Euro CAC to restructure. But if so, the Treaty is a suicide pact, for the design of the Euro CAC is flawed. In a meaningful subset of cases, the clause will not provide adequate debt relief. This article makes two primary contributions. First, using an Italian restructuring as an example, it explains why the ESM Treaty does not, in fact, require the use of the Euro CAC. Second, it examines the legal constraints—the most pertinent of which derive from the European Convention on Human Rights—that do restrict the use of local-law advantage.

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