Martín Guzmán Says More…

Project Syndicate: Argentina’s successful sovereign-debt restructuring amid the COVID-19 crisis was a remarkable achievement. In your forthcoming commentary for Project Syndicate’s annual Year Ahead magazine, you share lessons from it. For example, to complement bond contracts’ collective-action clauses, which became a market standard in 2014, we must improve the international architecture for sovereign-debt restructuring – a task, you note, that the G20 has taken on in the context of the pandemic. Which changes are most urgent?

Martín Guzmán: Over the last four decades, sovereign-debt restructurings have often been too little, too late: the process is delayed, and when it eventually takes place, the debt relief provided is often insufficient to restore debt sustainability and enable economic recovery. In fact, over the same period, more than half of sovereign-debt restructurings with private creditors have been followed by another restructuring or a default within five years.