Roundtable of experts on Sovereign Debt
April 3, 2023
Initiative for Policy Dialogue, Columbia Business School
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.
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Joseph Stiglitz
Speaker
President
Initiative for Policy Dialogue (IPD)
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Martin Guzman
Speaker
Co-President
Initiative for Policy Dialogue (IPD)
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Sean Hagan
Speaker
Professor from Practice
Georgetown Law School
Georgetown University
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Lee Buchheit
Speaker
Honorary Professor
University of Edinburgh Law School
University Of Edinburgh
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Kevin P. Gallagher
Speaker
Professor of Global Development Policy
Global Development Policy Center
Boston University
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Laura Carvalho
Partner
Director, Equity
Global Programs
Open Society Foundations
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Sergio Chodos
Speaker
Executive Director for Argentina and Bernardo Lischinsky, Senior Advisor to Executive Director
IMF
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Ishac Diwan
Speaker
Director of Research
Finance for Development Lab
Paris School of Economics
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Mark Espat
Speaker
Economic Ambassador
Government of Belize
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Mark Flanagan
Speaker
Deputy Director
Strategy Policy and Review Department
International Monetary Fund
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Eric Lalo
Speaker
Managing Director and Head of Sovereign Advisory
Rothschild & Co
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Jing Liu
Speaker
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Yan Liu
Speaker
Deputy General Counsel
International Monetary Fund
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Samy Muaddi
Speaker
Portfolio Manager
International Fixed Income Division
T. Rowe Price
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Brent Neiman
Speaker
Deputy Undersecretary for International Finance and Development
U.S. Department of Treasury
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Lupin Rahman
Speaker
Portfolio Manager
PIMCO
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Rahul Rekhi
Speaker
Managing Director
Financial Advisory
Lazard
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Jesse Schreger
Speaker
Associate Professor of Business
Economics Division
Columbia Business School
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Brook Taye
Speaker
Director General
Ministry of Finance of Ethiopia and Capital Market Authority
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Anahi Wiedenbrug
Speaker
Consultant
Suramericana
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Mark Weisbrot
Speaker
Co-Director
Center for Economic and Policy Research
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Zhengxin Zhang
Speaker
Executive Director for People’s Republic of China
IMF
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Jeff Hall
Speaker
Advocacy Director
Open Society Foundations
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Simon Cueva
Speaker
Academic Vice Chancellor
Universidad Internacional del Ecuador
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Chiara Mariotti
Partner
Development Economist
Open Society Foundations
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Maia Colodenco
Speaker
Consultant
Suramericana
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Sharmini Coorey
Speaker
Presidential Advisory Group
Multilateral Engagement and Debt Sustainability
Government of Sri Lanka
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Anna Gelpern
Speaker
Scott K. Ginsburg Professor of Law and International Finance
Georgetown Law
Georgetown University
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Brett House
Speaker
Professor of Professional Practice in the Faculty of Business
Economics Division
Columbia Business School
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Brad Setser
Speaker
Whitney Shepardson Senior Fellow
Council on Foreign Relations
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Gabriela Plump
IPD Staff
Managing Director
Initiative for Policy Dialogue (IPD)