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Restructuring Domestic Sovereign Debt: An Analytical Illustration
Author:
Mr. David A. Grigorian
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Series:
IMF Working Papers
Volume/Issue:
Volume 2023: Issue 024
Language:
English
Publication Date:
03 Feb 2023
DOI:
https://doi.org/10.5089/9798400232541.001
ISBN:
9798400232541
ISSN:
1018-5941
Pages:
29
Keywords:
Domestic debt restructuring; sovereign debt; net debt relief; restructuring Laffer Curve; debt relief calculation; debt relief target; DDR Laffer Curve; Debt relief; Debt restructuring; Sovereign debt restructuring; Domestic debt; Europe
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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.
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Sovereign domestic debt restructurings have become more common in recent years and touched upon a growing share of total public debt. This paper offers a simple framework for policymakers to think about the decision whether to restructure domestic sovereign debt as part of an effort to reduce overall public indebtedness. It also highlights a rather wide range of technical, legal, and operational issues a sovereign may face while restructuring domestic debt. As expected, factors such as debt reduction required to achieve sustainability, fiscal savings from a restructuring, and economic costs of a restructuring are key inputs into the decision making regarding a restructuring, but so are factors such as the composition of debt, financial stability costs, and crisis preparedness, all of which are discussed in the paper.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund