Getting Sovereign Debt Restructurings out of the Rut in 2023: Three Concrete Proposals

Reports and studies — Financial Advisory

February 08, 2023

The lives of hundreds of millions of people are tied to timely resolution of government debt restructurings. In the trade-off between speed, completeness and equity, we argue for a change in thinking.

Drawing on Lazard’s first-hand experience advising countries on debt restructurings, this policy paper reviews the three main obstacles to expeditious restructurings and proposes three concrete solutions to get sovereign debt restructurings out of the rut in 2023.

We believe that a fast restructuring should be the overriding priority for all stakeholders involved because the cost of the paralysis only adds to the economic distress of the indebted country.

To complete these restructurings, we argue that it is expedient to allow creditors to get more recovery in the future should ultimate conditions allow.

We also advocate for the insertion of clauses that incentivize creditor groups to seek early debt restructuring deals and to get around the current IMF ‘financing assurances’ stalemate in a radical way.

Click here to read the full policy brief.

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