Wojtek Paczos, Kirill Shakhnov, 24 September 2020

The sharp reductions in economic output and large-scale government expenditures prompted by the Covid-19 pandemic have led to an enhanced risk of sovereign defaults, especially in emerging economies. This column argues that an output drop alone increases the risk of foreign default, while a sudden expenditure hike alone increases the risk of domestic default. Thus, given the double nature of the Covid shock, recent proposals that would ease the burden of foreign debt after COVID-19 in emerging economies are necessary but may not be sufficient to prevent a wave of defaults on domestic debt.

Lee Buchheit, 21 May 2020

There are two phases needed in the response to help developing countries during the Covid-9 pandemic, the first is the need to get money into the hands of these countries, the second is the need for a more durable debt restructuring. Although China has joined with the other G20 countries in calling for a debt standstill, whether it will participate as a member of a coordinated form of that restructuring is an as-yet unresolved issue. Lee Buchheit (University of Edinburgh Law School) was speaking at CEPR / LSE IGA / SPP webinar on: Born Out of Necessity: A Debt Standstill for COVID-19, 7 May 2020.

Patrick Bolton, 21 May 2020

Getting a debt relief organised without credit ratings downgrades is like making an omelette without breaking any eggs, says Patrick Bolton (Columbia Business School & CEPR). Even without a debt standstill, rating downgrades are to be expected, so they should not be a deciding factor in negotiations. Recorded during a CEPR / LSE IGA / SPP webinar on: Born Out of Necessity: A Debt Standstill for COVID-19, 7 May 2020

Mitu Gulati, Ugo Panizza, 27 April 2020

In a new paper called Born out of necessity, a group of economists and  lawyers propose a way for developing and emerging countries to temporarily redirect debt repayments to fund Covid-19 relief. Ugo Panizza and Mitu Gulati tell Tim Phillips how it would work.

Patrick Bolton, Lee Buchheit , Pierre-Olivier Gourinchas, Mitu Gulati, Chang-Tai Hsieh, Ugo Panizza, Beatrice Weder di Mauro, 21 April 2020

Many low- and middle-income countries may face problems servicing their external debts while addressing the COVID-19 emergency. Urgent action is needed to prevent disorderly defaults and litigations. This column presents a mechanism to implement a debt standstill which would free significant resources to cover some of the most immediate costs of the COVID-19 crisis.

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