Debt Restructuring: results and risks

Some successes, but long timelines.

CF: Chad done, some steps for Zambia. But delays in forming official creditor committees (up to 6 months) and agreeing on an MoU (12 months for Chad).

Non-CF: delays between staff level agreement with IMF and program approval (Suriname, 7 months; Sri Lanka, 5 months and ongoing; similar problems with Republic of Congo, Angola).

The optimistic view: it was to be expected that it would take time for new creditors to develop their domestic restructuring processes and to integrate into multilateral coordination processes. Learning will occur, eventually speeding up processes, and the international community is taking steps to further support the re-emergence of a consensus on technical issues (the Global Sovereign Debt Roundtable).

The risks:

 Other countries which need a debt restructuring may delay undertaking it due to process fears

 Slow overall progress continues but creditors habitually wait out each other, embedding delays 

“Too little too late problem” persists  We are not in a sovereign debt crisis, but the wrong realization of global risks events could push the global economy into such a scenario (IMF WEO risk scenario)