Search Labs | AI Overview
Debt restructuring for national governments, also known as sovereign debt restructuring, is the process of changing the terms of a country’s debt to make it more manageable. The goal is to make it easier for the country to pay its debts.
Here are some steps involved in debt restructuring:
- Initiation: Determine if the country can continue to service its debt
- Negotiation: Negotiate a relief agreement with creditors
- Application: Apply comparable treatment to all creditors and maximize creditor participation
Debt restructuring can involve: changing maturities, adding grace periods, reducing the principal amount of the debt, reducing the interest rate, and debt service suspension.
To be successful, debt restructuring should be part of a broader policy package that addresses the underlying problems and debt vulnerabilities.
The Brady Plan was a notable example of debt restructuring, involving the exchange of bank loans into sovereign bonds.
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The ABCs of Sovereign Debt Relief | Center For Global DevelopmentOct 11, 2022
Center For Global Development -
How the IMF can make sovereign debt restructuring more …Sep 19, 2023 — Sovereign debt restructuring is essentially a zero-sum game of allocating the burden of a haircut among different cred…
Atlantic Council -
The ABCs of Sovereign Debt ReliefDebt restructuring: Changing the terms of sovereign debt to make paying debt service more manageable (can involve changing maturit…Center For Global Development
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