Restructuring Domestic Sovereign Debt An Analytical Illustration

Download or read book Restructuring Domestic Sovereign Debt: An Analytical Illustration written by Mr. David A. Grigorian and published by International Monetary Fund. This book was released on 2023-02-03 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Sovereign domestic debt restructurings have become more common in recent years and touched upon a growing share of total public debt. This paper offers a simple framework for policymakers to think about the decision whether to restructure domestic sovereign debt as part of an effort to reduce overall public indebtedness. It also highlights a rather wide range of technical, legal, and operational issues a sovereign may face while restructuring domestic debt. As expected, factors such as debt reduction required to achieve sustainability, fiscal savings from a restructuring, and economic costs of a restructuring are key inputs into the decision making regarding a restructuring, but so are factors such as the composition of debt, financial stability costs, and crisis preparedness, all of which are discussed in the paper.