Cover IMF Working Papers
Buy Book in Print
Sovereign Debt Restructuring and Growth
Author:
Lorenzo Forni
Search for other papers by Lorenzo Forni in
Current site
Google Scholar Close
,
Mr. Geremia Palomba null

Search for other papers by Mr. Geremia Palomba in
Current site
Google Scholar Close
,
Ms. Joana Pereira
Search for other papers by Ms. Joana Pereira in
Current site
Google Scholar Close
, and
Christine J. Richmond
Search for other papers by Christine J. Richmond in
Current site
Google Scholar Close
Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 147
Language:
English
Publication Date:
22 Jul 2016
DOI:
https://doi.org/10.5089/9781498382236.001
ISBN:
9781498382236
ISSN:
1018-5941
Pages:
42
Keywords:
WP; debt; debt ratio; sovereign default; debt restructuring; growth; haircut; crisis resolution; restructuring episode; Brady debt relief initiative; sustainability issue; default episode; Brady debt relief operation; debt sustainability issue; orchestrated debt relief event; restructuring agreement; debt restructuring announcement; post restructuring debt level; payment default; debt-restructuring episode; Debt relief; Sovereign debt restructuring; Debt reduction; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Download PDF (1.3 MB) Download Epub
This paper studies the effect of sovereign debt restructurings with external private creditors on growth during the period 1970-2010. We find that there are bad and good (or not so bad) debt restructurings for growth. While growth generally declines in the aftermath of a sovereign debt restructuring, agreements that allow countries to exit a default spell (final restructurings) are associated with improving growth. The impact can be significant. In general, three years after restructuring, growth is about 5 percent lower compared to countries that did not face restructuring over the same period. The exception is for final restructurings, which result in positive growth in the years immediately after the restructuring. Final restructurings tend to be better for growth because they reduce countries’ debt, with the strongest effect for countries that exit restructurings with relatively low debt levels.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund