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Contractual Vs. Rules-Based Approaches to Sovereign Debt Restructuring

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Abstract

Possible reforms to global sovereign debt restructuring procedures have largely been categorized as either ‘contractual/market-based’ or ‘statutory’. A closer look to the major Collective Action Clauses proposal shows that this is a false dichotomy. While Collective Action Clauses are useful technical instruments, they are by no means a substitute for a comprehensive debt restructuring framework.

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Notes

  1. The imposition of Paris Club terms on other creditors has been described by a Russian commentator as ‘Gulag-sur-Seine’ (EUROMONEY 2000).

  2. France, Britain and the US were owed a combined US$ 11 million out of an overall debt of almost US$ 1 billion.

  3. A bit opportunistically Zimbabwe has been added to the original list of potential beneficiaries as a latecomer in 2011.

  4. http://www.imf.org/external/spring/2014/mmedia/view.aspx?vid=3453291851001.

  5. Based on World Bank and country data for end-2014, erlassjahr.de indentified 108 countries outside the Organization of Economic Cooperation and Development with at least one out of five common debt indicators beyond critical thresholds, with deteriorations outnumbering improvements by more than 2:1. See: erlassjahr.de/Misereor: Schuldenreport 2016, forthcoming

References

  • EUROMONEY. 2000. Paris club comes under attack. In IMF/WB annual meeting, pp. 56–61.

  • Greenidge, Kevin, Roland Craigwell, Chrystol Thomas, and Lisa Drakes. 2012. Threshold effects of sovereign debt service: Evidence from the Caribbean. IMF-Working Paper 12/157.

  • IMF. 2015. Grenada: Third review under the extended credit facility; Country Report 15/333; December. Washington, DC: International Monetary Fund.

  • Kaiser, Jürgen. 2016. Making a legal framework for sovereign debt restructuring operational. In Too little, too late: The quest for resolving sovereign debt crises, ed. Martin Guzman, José Antonio Ocampo, and Joseph E. Stiglitz. New York: Columbia University Press.

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Authors and Affiliations

  1. Düsseldorf, Germany

    Jürgen Kaiser

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  1. Jürgen Kaiser
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Correspondence to Jürgen Kaiser.

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Kaiser, J. Contractual Vs. Rules-Based Approaches to Sovereign Debt Restructuring. Development 59, 94–99 (2016). https://doi.org/10.1057/s41301-017-0064-2

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  • DOI: https://doi.org/10.1057/s41301-017-0064-2

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