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Roundtable of experts on Sovereign Debt

April 3, 2023

Initiative for Policy Dialogue, Columbia Business School

Agenda  113kb pdf

The Covid-19 pandemic has resulted in sharp increases in public debt across the globe. Rising public debt levels of Emerging Markets and Developing Countries (EMDCs) are particularly worrying, with debt vulnerabilities being high in absolute terms and relative to pre-pandemic levels. The United Nations (UN) reports that around 60% of least developed and other low-income countries are at a high risk of debt distress or are already in debt distress. Meanwhile, the International Monetary Fund (IMF) estimates that seven emerging markets face a debt crisis probability of 40% or higher – compared to just two before the pandemic – and a further 45 countries face a probability of 20% or higher, compared to 30 before the pandemic. While Covid-19 was first and foremost a global health crisis, its economic fallout is uneven and has disproportionately affected EMDCs.

The war shock - with its economic effects, including the increase in food and energy prices, supply chains disruptions and capital flow reversals, has further increased EMDCs sensitivity to external shocks. This, in turn, makes it even more challenging for EMDCs to roll over their debt.

So far, Advanced Economy’s (AEs) monetary policy response to counter inflation has been centered on central bank interest rates hikes. This response from AE’s central banks, together with quantitative tightening, has resulted in the tightening of financial conditions worldwide, with reduced liquidity, increases in borrowing costs, and added pressure on international reserves. The dollar’s appreciation also puts more pressure on EMDCs’ balance sheets. Approximately half of all cross-border loans and international debt securities are denominated in US dollars. The IMF has warned that despite some progress made by EMDC’s in the issuance of debt in their own currencies, their private corporate sectors continue to be heavily indebted in dollar-denominated debt. Thus, a stronger dollar aggravates debt sustainability problems for a number of EMDCs.

Given the current levels of debt distress among EMDCs, a significant number of debt restructurings can be expected. However, there is a serious concern that the existing restructuring “system” may not be up to the challenge. While the restructuring of bank or corporate debt is guided by the existence of a predictable legal and institutional framework, the sovereign debt restructuring process is a composite of practices and conventions that have evolved over the years. Given both the evolution of capital markets and the emergence of new official bilateral creditors, these practices and conventions - which were already considered as creating a “too little, too late” problem - are under considerable stress. Reforms to date – including the Common Framework – have failed to address a number of key issues. Recognizing the urgency of this problem, the IMF and the World Bank have convened a Global Sovereign Debt Roundtable, which will seek to reach agreement on how the “rules of the road” for sovereign debt restructurings can be improved.

In that context, the roundtable of experts – reflecting the views of a broad cross section of stakeholders- will meet at Columbia University Graduate School of Business to discuss both the key deficiencies of the existing framework and possible avenues for reform. To ensure candor, the event will be closed to the public and Chatham House Rules will apply.

The stakes are high. The events of the last three years have had a deeply negative impact on progress to attain the Sustainable Development Goals (SDGs). In addition to reversing progress in global development, history also reminds us of the deeply polarizing political consequences that debt sustainability problems can have worldwide.

  • Joseph Stiglitz
    Speaker
    President
    Initiative for Policy Dialogue (IPD)
  • Martin Guzman
    Speaker
    Co-President
    Initiative for Policy Dialogue (IPD)
  • Sean Hagan
    Speaker
    Professor from Practice
    Georgetown Law School
    Georgetown University
  • Lee Buchheit
    Speaker
    Honorary Professor
    University of Edinburgh Law School
    University Of Edinburgh
  • Kevin P. Gallagher
    Speaker
    Professor of Global Development Policy
    Global Development Policy Center
    Boston University
  • Laura Carvalho
    Partner
    Director, Equity
    Global Programs
    Open Society Foundations
  • Sergio Chodos
    Speaker
    Executive Director for Argentina and Bernardo Lischinsky, Senior Advisor to Executive Director
    IMF
  • Ishac Diwan
    Speaker
    Director of Research
    Finance for Development Lab
    Paris School of Economics
  • Mark Espat
    Speaker
    Economic Ambassador
    Government of Belize
  • Mark Flanagan
    Speaker
    Deputy Director
    Strategy Policy and Review Department
    International Monetary Fund
  • Eric Lalo
    Speaker
    Managing Director and Head of Sovereign Advisory
    Rothschild & Co
  • Jing Liu
    Speaker
  • Yan Liu
    Speaker
    Deputy General Counsel
    International Monetary Fund
  • Samy Muaddi
    Speaker
    Portfolio Manager
    International Fixed Income Division
    T. Rowe Price
  • Brent Neiman
    Speaker
    Deputy Undersecretary for International Finance and Development
    U.S. Department of Treasury
  • Lupin Rahman
    Speaker
    Portfolio Manager
    PIMCO
  • Rahul Rekhi
    Speaker
    Managing Director
    Financial Advisory
    Lazard
  • Jesse Schreger
    Speaker
    Associate Professor of Business
    Economics Division
    Columbia Business School
  • Brook Taye
    Speaker
    Director General
    Ministry of Finance of Ethiopia and Capital Market Authority
  • Anahi Wiedenbrug
    Speaker
    Consultant
    Suramericana
  • Mark Weisbrot
    Speaker
    Co-Director
    Center for Economic and Policy Research
  • Zhengxin Zhang
    Speaker
    Executive Director for People’s Republic of China
    IMF
  • Jeff Hall
    Speaker
    Advocacy Director
    Open Society Foundations
  • Simon Cueva
    Speaker
    Academic Vice Chancellor
    Universidad Internacional del Ecuador
  • Chiara Mariotti
    Partner
    Development Economist
    Open Society Foundations
  • Maia Colodenco
    Speaker
    Consultant
    Suramericana
  • Sharmini Coorey
    Speaker
    Presidential Advisory Group
    Multilateral Engagement and Debt Sustainability
    Government of Sri Lanka
  • Anna Gelpern
    Speaker
    Scott K. Ginsburg Professor of Law and International Finance
    Georgetown Law
    Georgetown University
  • Brett House
    Speaker
    Professor of Professional Practice in the Faculty of Business
    Economics Division
    Columbia Business School
  • Brad Setser
    Speaker
    Whitney Shepardson Senior Fellow
    Council on Foreign Relations
  • Gabriela Plump
    IPD Staff
    Managing Director
    Initiative for Policy Dialogue (IPD)

Event Information

Type Meeting
Program Sovereign Debt Restructuring