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Restructuring Sovereign Debt: The Case for Ad Hoc Machinery
Restructuring Sovereign Debt: The Case for Ad Hoc Machinery
By Lex Rieffel
Brookings Institution Press, 2003, 368 pp
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In recent decades, countless governments have borrowed too much abroad and subsequently had to reschedule or scale back their payments to foreign creditors (Argentina being only the most recent in a long list). As a result, there have been various suggestions for streamlining, formalizing, and legalizing the procedures for dealing with sovereign debt problems. But in fact, reasonably orderly procedures have developed on an informal basis as collective experience builds. In this useful reference, Rieffel, for many years an official at the U.S. Treasury, provides a thorough account of the post-1950 evolution of procedures for dealing with sovereign debt owed to both official and private creditors. After critically examining proposals for major institutional overhauls, he vigorously defends the ad hoc, evolutionary approach, while offering his own recommendations for modest improvements on current practices.