New York Times
June 20, 2011
Let´s be clear from the beginning: insolvent debtors need genuine debt relief, in the form of a debt restructuring that reduces the nominal value of debt obligations. Sovereign countries are no exception.
The debt crises in Latin America in the early 1980s offer an eloquent illustration. Back then, the first response was to make time for drastic fiscal adjustments through an United States-sponsored International Monetary Fund package, to which the 1985 Baker Plan added a voluntary rescheduling of private bank loans. The result was a huge debt overhang that discouraged investment and growth, and led to growing debt ratios. It wasn't until 1989 that the players involved recognized the need of a debt haircut and launched the Brady Plan, which exchanged unrecoverable, unmarketable loans for discount marketable Brady bonds -- the seed of emerging markets as we know them.
More
No comments:
Post a Comment