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Too Little, Too LateThe Quest to Resolve Sovereign Debt Crises$
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Martin Guzman, José Antonio Ocampo, and Joseph E. Stiglitz

Print publication date: 2016

Print ISBN-13: 9780231179263

Published to Columbia Scholarship Online: January 2017

DOI: 10.7312/columbia/9780231179263.001.0001

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Making a Legal Framework for Sovereign Debt Restructuring Operational

Making a Legal Framework for Sovereign Debt Restructuring Operational

The Case for a Sovereign Debt Workout Institution

Chapter:
(p.223) Chapter 12 Making a Legal Framework for Sovereign Debt Restructuring Operational
Source:
Too Little, Too Late
Author(s):

Jürgen Kaiser

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231179263.003.0013

The chapter discusses the “institutionalization” of a multinational framework for sovereign debt restructuring. In Kaiser’s view, the institutionalization should comply to three basic principles: first, it needs to restructure debt in a single comprehensive process, with no payment obligations being exempted from the process; second, it needs to allow for an impartial decision making about the terms of any debt restructuring; and third, this decision must be based on an impartial assessment of the debtor’s situation. He claims that there are not many historical precedents for a sovereign debt restructuring which complies with these conditions, but the case of Indonesia in 1969 may be inspiring. He argues that a “Sovereign debt Restructuring Liaison Office” mandated by the UN and run independently from any debtor or creditor interference could be a catalytic element with the potential to overcome the shortcomings of existing procedures. In this view, it could facilitate a comprehensive negotiation format with all stakeholders around the table; it could provide an impartial and thus realistic assessment of the need for debt relief; and it could suggest an un-biased solution. Such an “office” could be established immediately as an outcome of the present UN-General Assembly consultation process and then develop its rules, regulations and infrastructure over time.

Keywords:   Sovereign Debt Crises, Debt Workouts

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