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Government Debt in Rough Waters: A Navigation Guide

Sep 29 2020

Government Debt In Rough Waters

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The COVID-19 pandemic is triggering sovereign debt distress across the globe. Public debt was already elevated in many countries before the crisis hit, and the pandemic has created a surge of debt with no precedent, even during wars. How governments learn to live with such debt levels or find orderly — or less orderly — ways to reduce them will have a critical impact on people’s lives across the world.

In this report, Lazard’s Sovereign Advisory Group examines ways to improve outcomes for governments facing a debt reckoning. The report explores key characteristics of today’s sovereign debt landscape:

  • The wide variation in public debt levels across countries and the fact that each country’s capacity for debt is highly idiosyncratic
  • The complex policy trade-offs faced by governments at risk of financial distress
  • How a significant evolution in the creditor base is changing the dynamics of debt restructuring
  • How the process of debt restructuring could be made smoother

 

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