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Make a Reform Process Visible and Sustainable "Frameworks for Sovereign Debt Restructuring" New York Nov. 17th 2014.

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Präsentation zum Thema: "Make a Reform Process Visible and Sustainable "Frameworks for Sovereign Debt Restructuring" New York Nov. 17th 2014."—  Präsentation transkript:

1 Make a Reform Process Visible and Sustainable "Frameworks for Sovereign Debt Restructuring" New York Nov. 17th 2014

2 Three principles will are essential for a reformed DWM it needs to restructure debt in a single comprehensive process, with no payment obligations un-considered; it needs to allow for an impartial decision making about the terms of any debt restructuring, and this decision must be based on an impartial assessment of the debtor's situation. erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, Düsseldorf

3 Few historical precedents Indonesia 1968: LIC with 109 US-$ pc- income and US-$ 2.1bn external debt erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, Düsseldorf

4 How to break the stalemate: A mediator needed erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, Düsseldorf

5 Impartiality pays off After a period of shuttle diplomacy Abs made a proposal, which foresaw the full repayment of the capital and the full cancellation of past due and current interest - uniformly on all claims. With a face saving deviation of an across-the-board interest rate of 0.5%, Abs’ proposal was implemented. The agreement was a speedy solution to a complex problem, and it led to a sustainable debt situation in Indonesia until the Asian crisis struck in erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, Düsseldorf

6 In contrast: a sobering recent experience Grenada in default since April 2013 Conference of Churches suggests a creditors’ conference in October 2013 Agreement on need of debt relief around 50% of EDT among GoG, civil society and IMF. Following IMF guidance Grenada instead discusses restructuring with bondholders, faces litigation on bilateral debt to Taiwan Still in default in November 2014 erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, Düsseldorf

7 Can impartiality be institutionalized? Debtor needs an institution to turn to in order to trigger a comprehensive and impartially led restructuring A “Sovereign Debt Forum” is an option Going beyond an SDF: –A small standing institution –Potentially covering the full range from informal mediation to binding arbitration erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, Düsseldorf

8 The “institution” supports sovereign debtors with regard to debt workout procedures; facilitates the organisation of exploratory meetings with all creditors supports the quest for expertise/ independent assessment with regard to debt sustainability mediates a conciliatory solution between a sovereign and all its creditors upon request by the sovereign organizes a more formal and binding debt arbitration process based on UNCITRAL principles and rules, if more informal instruments facilitation, mediation, conciliation fail. runs a depository of debt restructuring experiences and best practices emerges over time. erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, Düsseldorf

9 Earlier proposals towards institutionalization. For instance: erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, Düsseldorf Permanent Court of Arbitration in the Hague Scotland as host of debt arbitration

10 “…open-ended consultation process on the best possible option for a sovereign debt workout with the involvement of all relevant stakeholders, including the private sector, academia and civil society…” For the sake of the UNGA- process: Beware of any…. erlassjahr.de – Entwicklung braucht Entschuldung, Carl-Mosterts-Platz 1, Düsseldorf

11 Because there are countries under threat of new debt crises AfghanistanBhutan Burkina FasoBurundi CameroonCape Verde Central African RepublicComoros ChadDR Congo Cote d’IvoireDjibuti DominicaThe Gambia GhanaGrenada GuineaGuinea-Bissau GuyanaHaiti Kyrgyz RepublicLao PDR LesothoMalawi MaliMaldives Marshall IslandsMauretania MongoliaMozambique NicaraguaNiger SamoaSao Tomé & Principe Sierra LeoneSolomon Islands St. LuciaSt.Vincent and the Grenadines TajikistanTogo TongaTuvalu YemenKiribati


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