brady plan
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2022 ◽  
pp. 1-19
Author(s):  
Edwin M. Truman

The Latin American debt crisis consumed the 1980s and was not restricted to Latin America. Starting from the August 1982 Mexican weekend, the crisis had three phases: Concerted Lending (1982-5), Baker Plan (1985-9) and Brady Plan (1989 to mid 1990s). This article describes the evolution of the debt strategy and the road to embracing debt write-downs at the end of the decade. In the absence of an external coordinating mechanism, four groups of parties had to reach agreement on any change in the strategy: the borrowing countries, their commercial bank lenders, the home-country authorities of those lenders, and the International Monetary Fund as the principal international institution. Each group could effectively veto any change in the strategy. This need for consensus is lesson number one from the 1980s for today. Lesson number two is that political economy aspects dictated that the strategy be implemented on a case-by-case basis. The article concludes with an application of these lessons to a similar, but even more global, potential debt crisis in the wake of the COVID pandemic.


Author(s):  
Olivares-Caminal Rodrigo ◽  
Douglas John ◽  
Guynn Randall ◽  
Kornberg Alan ◽  
Paterson Sarah ◽  
...  

This chapter starts by introducing the Brady Plan which aimed to address the debt crisis that occurred in the developing countries during the 1980s. The chapter also looks at new developments which have taken place in the area of sovereign debt restructuring since the Brady Plan. These are the EU sovereign debt crisis, and the ongoing Argentine litigation in New York. The former is a debt crisis that was originated in Greece in late 2009 and has been taking place in other Euro-areas ever since and has affected Portugal, Ireland, Spain, and Cyprus. The ongoing Argentine litigation in New York relates to a claim initiated by a hedge fund to collect on defaulted debt obligations issued by Argentina based on the breach of the pari passu clause. The pari passu clause is a standard clause in public or private international unsecured debt obligations.


2011 ◽  
Vol 11 (1) ◽  
pp. 73
Author(s):  
Thomas J. Webster

This paper investigates the presence of weak level efficiency in the secondary market for developing country debt y modeling as ARIMA processes debt price variations of eight large debtor countries that were actively traded during the period January 1986 to December 1992. The analysis suggests that in some cases the secondary market for developing-country debt was weakly inefficient and that there existed at least one trading rule capable of generating above-average returns. Moreover, the narrowing of above-average returns in the period following the announcement of the Brady Plan suggests that the secondary market for developing country debit became more efficient, possibly due to a reduction in default risk and an increase in the availability of timely investment information.


1992 ◽  
Vol 34 (4) ◽  
pp. 645-678 ◽  
Author(s):  
Christian Suter ◽  
Hanspeter Stamm

The settlement of the external debt of insolvent sovereign borrowers has become one of the most important issues in relations between the north and south since the outbreak of the global debt crisis in the early 1980s. For the past eight years representatives of governments and international organizations, bankers, and scientists have suggested several proposals and plans to solve the present debt crisis. The most prominent schemes in this respect are the Baker Plan of 1985, which suggested massive new credits for the most highly indebted developing countries, and the recently adopted Brady Plan, which proposes partial debt discounts and reductions in interest rates. Both of these debt settlement proposals were initiated by the United States and are supported by the other principal creditor countries. However, despite the ten years of crisis management, world leaders have not yet agreed upon a longterm solution to the current debt problems. In the history of the capitalist world economy, the current problems of coping with a global debt crisis do not represent a unique event. Rather, recent empirical studies demonstrate that sovereign borrowers have experienced many instances of debt-servicing difficulties during the past 150 years (Eichengreen and Portes 1986; White 1986; Eichengreen and Lindert 1989; Marichal 1989; Suter 1989).


1991 ◽  
Vol 6 (12) ◽  
pp. 13 ◽  
Author(s):  
Sweder van Wijnbergen ◽  
Mervyn King ◽  
Richard Portes
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