Time is Ripe for Innovation in the World of Sovereign Debt Restructuring

2020-11-25T10:01:38-05:00November 19, 2020|

By Peter Breuer and Charles Cohen

عربي, 中文, Español, Français, 日本語, Português, Русский 

When corporations have too much debt and need to restructure it, creditors often end up exchanging bonds or loans for stocks. They trade the guaranteed payout of a fixed-income investment for an equity position whose return depends on the company’s future results. […]

Managing Debt Vulnerabilities in Low-Income and Developing Countries

2019-03-14T13:28:16-04:00March 22, 2018|

By Tao Zhang

March 22, 2018

Versions in Português (Portuguese)  

Congested streets in Dhaka, Bangladesh. In a third of low-income countries, including Bangladesh, government deficits finance investment in much needed infrastructure (photo: Motoya Taguchi/Jiji Press/Newscom).

Government debt in some of the world’s poorest countries is rising to risky levels, a new IMF report shows. The report looks at economic developments and prospects among the world’s low-income […]

Dealing with Sovereign Debt—The IMF Perspective

2019-03-26T12:00:10-04:00February 23, 2017|

By Sean Hagan, Maurice Obstfeld, and Poul M. Thomsen

Versions in Français (French), Deutsch (German); ελληνικά (Greek), and Español (Spanish)

Debt is central to the functioning of a modern economy. Firms can use it to finance investments in future productivity. Households can use it to finance lumpy purchases, such as big consumer durables, or a home. Sometimes, however, firms’ investments do not pan out or a household’s main earner loses his or her job. Countries’ legal systems generally recognize that in these cases, debtors and creditors alike—along with society at large—may be better off if there is an orderly […]

Tackling China’s Debt Problem: Can Debt-Equity Conversions Help?

2019-03-27T09:50:48-04:00April 26, 2016|

By James Daniel, José Garrido, and Marina Moretti

Version in 中文 (Chinese)

China’s high and rising corporate debt problem and how best to address it has received much attention recently. Indeed, corporate debt in China has risen to about 160 percent of GDP, which is very high compared to other, especially developing, countries.

The IMF’s April 2016 Global Financial Stability Report looked at the issue from the viewpoint of commercial banks and resulting vulnerabilities. Its analysis suggests that the share of commercial banks’ loans to corporates that could potentially be at risk has been rising fast and, […]

Greece: Past Critiques and the Path Forward

2019-03-27T15:38:46-04:00July 9, 2015|

IMG_0248By Olivier Blanchard

(Versions in DeutschEspañolFrançaisItalianoελληνικάРусский中文, 日本語عربي, and Português)

All eyes are on Greece, as the parties involved continue to strive for a lasting deal, spurring vigorous debate and some sharp criticisms, including of the IMF.

In this context, I thought some reflections on the main critiques could help clarify some key points of contention as well as shine a light on a possible way forward.

The main critiques, as I see them, fall under the following four categories:

Acting Collectively: A Better Way to Restructure Government Debt

2017-04-14T01:51:25-04:00November 24, 2014|

By Sean Hagan 

(version in Español)

To restructure or not to restructure? That is a question few governments would like to face. Yet, if a country does find itself with an unsustainable debt burden, one way or another, it will have to be restructured. And if that time comes, it is better for the debtor, creditors, and the entire financial system that the restructuring be carried out in a prompt, predictable, and orderly manner.

The global financial crisis ushered in a new wave of sovereign debt crises that […]

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