Ten years ago, in the wake of the Asian financial crisis and subsequent Argentine default, the international community debated how to best promote the timely, effective restructuring of sovereign debt. It focused largely on the merits of a so-called statutory approach, versus the voluntary use of contractual terms designed to facilitate restructurings. This debate is once more on the international policy agenda and is again framed as statutory versus contractual approaches. This paper outlines the problems impeding timely sovereign debt restructurings, identifies the policy responses proposed and discussed 10 years ago in response to financial crises, and discusses the elements of old debates and how they can remain relevant in today’s new challenges. The paper concludes with three areas for further analysis: expanding the scope of contractual clauses that can help facilitate restructurings; accounting, tax and regulatory frameworks and identifying possible changes to remove impeding obstacles; and improving the process for negotiating debt restructurings, as well as creating a Sovereign Debt Forum for exchange of information.
Sovereign Debt Restructuring: Old Debates, New Challenges
CIGI Paper No. 32