Debt Sustainability Analyses (DSAs) have major implications for debt negotiations. The outcomes of these negotiations have distributional consequences between the debtor and its creditors on the one hand, and amongst creditors on the other hand.
This paper assesses the various definitions and mechanisms used to achieve debt sustainability. Section 2 examines the basis for the definition of sustainability currently used by the international community to determine debt relief levels and monitor long-term sustainability.
This paper takes stock of the issues involved in sovereign risk management, focusing on developing countries. It identifies the needs for risk management at the country level by briefly reviewing the various shocks developing countries are exposed to.
This paper looks back to the 1980s and at how the international community addressed the debt crises of countries that were primarily indebted to international commercial banks. It describes how the initial policy, which emphasized concerted refinancing of obligations as they fell due, was superseded in 1985 by the ‘Baker Plan’, which sought multi-year relief packages and focused on fifteen countries in which the major banks had large exposures.
This paper emphasizes that it matters whether domestic debt means debt issued in local currency (at home or abroad) or to local investors (in domestic or foreign currency) or governed by local law (also in domestic or foreign currency).
This chapter looks at some of the policy positions that underpinned the Jubilee 2000 campaign. While the arguments of debt campaigners were, at the time, dismissed as the politics of naïve idealists, they soon became part of the new realism in official debt policy. How did this shift come about? And, going forward, what are the key features that can usefully inform official aid and debt policy frameworks?
This paper avers that the key to understanding the leadup to the Argentinian debt crisis was the particular anti-inflation and growth strategy—followed first in 1979–81 and in a more radical way in 1991–2001—of fixing the exchange rate, liberalizing the economy, and fully opening it to international financial flows.
In this paper the author situates the “Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets” in the context of international policy developments for treating sovereign debt crises in the late 1990s and early years of the present decade.
Much of the discussion of the risks of sovereign debt crises has focused on the issue of currency risk. This has led to the recommendation that countries should borrow in their local currency. Yet in the drive to develop local markets, many countries are running up domestic debt burdens.
This chapter is concerned with the issue of how to balance bailouts (or ‘lending into arrears’) with debt reductions (or ‘private sector involvement’) in the resolution of sovereign debt crises.