International Debt Architecture Reform
A Proposal for a New Approach to Restructuring African Eurobonds: The DOVE Fund and Principles
By Daniel Bradlow
This article argues that the current arrangements for restructuring sovereign bonds do not meet Africa’s needs. African states and their supporters should create a DOVE (Debts of Vulnerable Economies) Fund that can purchase the bonds of African sovereign debtors in distress and commit to restructure them in accordance with the DOVE Fund Principles. This Fund can help interrupt inter-creditor dynamics and push the bondholders to be more open to innovative approaches to debt restructuring. This article, after briefly considering some of the problems with the current process for restructuring sovereign bonds, discusses the DOVE Fund and the DOVE Fund Principles.
Systemic reform of the international debt architecture is yet to start
By Yuefen Li
The COVID-19 pandemic has pushed the reform of the international debt architecture to the policy agenda. Up to now policy measures to address the crushing debt burden of developing countries have focused on boosting time bound liquidity provision, which is insufficient in amount and restrictive in scope as debt-ridden and pandemic struck middle-income countries have not been covered. Even the implementation of these policy measures has been hindered by existing systemic problems. The reform of the debt architecture is yet to start. However, complacency seems to emerge. The risk of “wasting” the crisis should be avoided.
Can the World Afford to Put All Hopes on Debt Contract Improvements for Sovereign Debt Workout?
By Yuefen Li
The lack of a formal sovereign debt restructuring mechanism has been considered by many as a serious deficit or missing link in the international financial architecture. However, even though the international debates on the topic have been going on for decades, heating up each time with the onset of a debt crisis and cooling down when the crisis was contained, up to now such debates have not yet come to fruition. With the onset of the global financial crisis and especially the legal litigation against Argentina and Greek debt crisis, the debate has become even more intensified with views more convergent than ever on the need of a mechanism. For decades, timely and orderly sovereign debt restructuring which can restore medium term debt sustainability to debtor countries as well as less costly to creditors has been the common expectation of stakeholders involved in sovereign debt restructuring, except those who want to get their windfalls in the debt crisis. (more…)