Organised by:
Good Practices in Sovering Debt Borrowing
Co-hosted by:
In association with:
Sovereign Debt Forum

The Debt Burden

How to Create a Better Debt Management Framework
29 MARCH 2021

The world is currently facing an unprecedented level of sovereign debt – and debt is continuing to pile up. The state of sovereign borrowing was critical prior to the pandemic, with several countries already facing limited fiscal space and increasing levels of debt, but the situation has deteriorated, tipping some economies over the edge. In this seminar, we will present the preliminary conclusions of a paper on good practices in sovereign borrowing. The main topics covered will be:

The status and causes of the debt accumulation problem
The importance of debt management as a preventative measure
Initiatives put in place to address the causes and consequences of the debt problem
How the lack of transparency has hindered accurate debt sustainability assessments and investment analyses
Policy lessons critical to successful debt management.

Presentation of Research Paper:

“The Debt Burden: how to create a better debt management framework”

Good Practices

In Sovereign Debt Borrowing
22 FEBRUARY 2021
The pandemic and the resulting collapse in economic activity have significantly increased the risk of debt distress in many countries, especially the poorest ones. A number of initiatives, notably the G20 debt relief for the world’s poorest countries, have been unveiled to avert instances where servicing existing debt would compound and constrain those countries’ response to the crisis. As the debt position of many countries and its long-term sustainability have been extensively scrutinised – and debt premia have increased as a result – the importance of assessing the real need to incur new debts and to improve transparency in sovereign borrowing has been also recognised. Several recent debt scandals confirm that debts sometimes are wrongly incurred, or the purpose of their use is not the appropriate one. The G20 have stressed the importance of transparency (G20 Operational Guidelines for Sustainable Financing) while the Institute of International Finance has recently published a set of voluntary principles to improve transparency in sovereign debt markets (IIF Principles for Debt Transparency). It is clearly important to deal with debt ex post and ensure that countries are able to manage their debt and mitigate the risk of facing distress situations. This issue that has been evident through several crisis and restructuring situations, the most recent ones being Argentina and Ecuador. It is, however, equally important to deal with debt ex ante; this means assessing whether and at which conditions countries should incur in debt obligations. Focusing on debt resolution will only deal when the problems as they occur but it will not attempt to tackle the source of the problem: it cures rather than prevent.