Commentary on “Sovereign Debt Restructuring: the Road Ahead” by Benu Schneider

Abstract

This paper by Benu Schneider provides an excellent and elaborated discussion of the recent history and future prospects of sovereign debt restructuring mechanisms. It starts by summarizing the evolution of institutions and instruments to restructure sovereign debt and the changing role and views of the IMF. She then goes on to provide a broad and balanced view of the challenges and policy options in a sufficiently wide agenda. Having read before some of the reports on expert group meetings on the subject (for example, United Nations, 2012) I find this paper much more fair in terms of the directions of reform which I would prefer: those that require an architecture with much more statutory elements than the decentralized market-driven approach that has been favored until recently and after the demise of the Sovereign Debt Restructuring Mechanism (SDRM) proposed by the IMF at the beginning of the past decade. Still, the conclusions of the paper go only half-way to accepting a strong move in this direction, when it is said that there are many steps and dimensions of improved mechanisms that can be undertaken so as to make voluntary arrangements workable and effective. I understand the balanced position taken in the paper but tend to disagree with such a view, although I must say that my reading is pretty much influenced by the case of Argentina and the recent developments in the US courts that I see as a demonstration of the limits to the non-statutory way.