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The debt restructuring technique employed during the period between 1982 (when the global debt crisis began) and 1990 (when the first of the so-called Brady Initiative deals signalled the end of the crisis) was therefore deliberately short-term and assiduously ruled out any reduction in the size of the debt stocks. Sovereign debtors that ask for significant reductions in the size of their external liabilities in the coming decade should therefore expect debt negotiations that are longer, more contentious and leave in their wake far more holdouts than would have been the case had the countries limited their demands to simple maturity extensions and interest rate relief.[15] Political frailty All sovereign debt crises are crises. In the recent Argentine restructuring, for example, the IMF staff publicly signalled that significant further concessions by the Argentine authorities in their private sector debt negotiations would be inconsistent with the goal of debt sustainability.[18] That said, relying exclusively on the stiff vertebrae of IMF staffers to arrest undershooting in sovereign debt workouts may be incautious. Key points All sovereign debt restructurings risk undershooting (providing less debt relief than is needed to restore the country to long-term sustainability) or overshooting (extracting more debt relief from creditors than turns out to have actually been necessary). [Extracted from the article]

All sovereign debt restructurings are inherently messy, expensive, exasperating, time-consuming, and contentious. These are the familiar pathologies in the international system to resolve unsustainable sovereign debts. But the period since the onset of the Covid-19 crisis has revealed (to use a term we all learned during pandemic lockdowns) several new co-morbidities. These include a breakdown in the ability of the major external creditor groups (traditional Paris Club lenders, non-Paris Club bilateral creditors like China and bondholders) to coordinate their debt relief efforts, the increasingly diverse nature of the private-sector entities holding claims against a debtor state, and the total absence of any mechanisms—statutory or contractual—that can be used to ensure that the sacrifices made by the vast majority of claimants and official sector sponsors in the economic recovery process cannot be exploited by the uncooperative few. [ABSTRACT FROM AUTHOR]

Abstract: The Eurozone sovereign debt crisis began in the spring of 2010. Seven years on seems like an appropriate point at which to critique how the crisis has been handled and to assess whether policy changes will be required should it flare up again. In particular, there are a number of lessons to be learned from the Greek debt restructuring of 2012. [ABSTRACT FROM AUTHOR]

The article explores the involvement of the official sector in assisting private lenders in their claims against distressed sovereign debt borrowers. It discusses the sector's objectives in resolving sovereign debt problems, the historical phases in which the sector has been involved in the recovery of private loans to foreign sovereigns, and the role of the judiciary and the International Monetary Fund (IMF) in this process.