Sovereign debt restructurings : A Law & Economics perspective

After the successive restructurings of Greek and Ukrainian sovereign debts in Europe, and while Venezuela and Puerto Rico have recently reached an agreement with their bondholders, the debate on the optimal mechanisms for restructuring sovereign debts has resurfaced in the aftermath of the coronavirus pandemic, which has severely increased the indebtedness of governments. The moratoria agreed in April 2020 by the G20 countries have been standardized within the framework of the Debt Service Suspension Initiative (DSSI) and today allow 73 countries to benefit from a temporary suspension of payments due on debts contracted with their bilateral public creditors. A “Common Framework for Debt Relief” was agreed on November 13, 2020 between the G20 members in order to coordinate the negotiations of these same creditors according to common principles.
In his Master 2 thesis on “Business, Tax and Financial Market Law”, Luidgy Belair, a member of the Rules for Growth Institute, examines examines the construction of sovereign debt as an object of law before analyzing the efficiency of the sovereign bankruptcy regime with respect to bankruptcy law principles. In this regard, he attempts to understand how these regimes could move from a paradigm sanctioning the inefficiency of public policies to a mechanism aiming to preserve the value of the economic and political entity in difficulty.

>>> Read the thesis (in French)