Re-Define produces solutions to current and long-term public challenges and helps policy makers implement them
Sovereign Debt
Tackling Sovereign Debt Systematically - If Not Now then When?
Anna Gibson, Research Associate, Re-Define
Development actors have long argued for an overarching international mechanism that would resolve sovereign debt crises in a fair, transparent, and consistent manner. Such a mechanism would assist poor countries that often suffocate under unsustainable levels of (sometimes odious) debt, lacking the political power and legal rights to negotiate with their creditors in an impartial and efficient forum. It would make handling sovereign debt problems less messy, more predictable, and the burden sharing simpler and fairer. It would also provide incentives to curtail irresponsible lending policies on behalf of creditors.
However, since these problems were seen to be 'out there' and we in the rich OECD world were mostly the creditors there was little political will to support this call. That was a missed opportunity. The developed world is now realising just how vital a sovereign debt workout procedure really is. The escalating sovereign debt levels of Iceland, Greece, Italy, Ireland and Spain, not to mention Dubai, that have transpired in the wake of the global financial crisis, have brought the severity of the issue out of the hypothetical realm and into that of Western reality.
