Sharing responsibilities as well as benefits? The global debt crisis and the role of private creditors

28 October 2021
03PM-04PM
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Online Expert Discussion

 

Sharing responsibilities as well as benefits? The global debt crisis and the role of private creditors

 

Thursday, 28 October 2021, 3 – 4:30 pm CEST

 

The participation of private creditors in corona-related debt relief initiatives such as the G20 Debt Service Suspension Initiative has been heavily insufficient since inception. The debt restructuring framework of the G20 and Paris Club, the Common Framework for Debt Treatments, was created to resolve the problem, given that the lack of private sector participation was compromising official efforts to create breathing space and prevent a protracted debt crisis in vulnerable countries. Current debt treatments say otherwise. Debtor countries are reluctant to make use of the opportunity of debt treatments, since they are concerned about the impact on their sovereign ratings and long-term access to private capital. Even middle-income countries, which are over indebted, would rather continue paying than seek much needed debt restructuring negotiations. Recent empirical evidence does not underpin this apprehension. It suggests that debt relief, if done right, does not lead to the exclusion from capital markets, even though borrowing countries do face negative consequences if they publicly express their intention of seeking a restructuring. Why this is the case and what can be done about it – so that countries can manage debt distress and invest in sustainable development – this is at the centre of this online expert discussion taking place in the advent of the G20 Joint Finance and Health Ministers’ Meeting.

 

In the run-up to the joint meeting of G20 health and finance ministers this October we have invited international experts from academia, international financial institutions, government and the private sector to discuss on the following questions among others:

  • Is there empirical evidence that debt relief excludes countries from much-needed development finance?
  • How relevant have private capital flows been in guaranteeing stable financing flows during the global recession?
  • On what grounds could the participation from the private sector in official debt relief initiatives, comparable to other creditors, be expected?
  • In what ways can the G20 compel private sector participation and equal burden sharing?

Presenters and discussants: 

  • Aitor Erce, Advisor to the Chief Economist of the African Development Bank, Visiting Professor at the School of European Political Economy (LUISS) and Research Fellow at Navarra Public University
  • Moritz Krämer, Chief Economist, Countryrisk.io
  • Valentin Lang, Assistant Professor for International Political Economy and Development, University of Mannheim
  • Dr. Nadine Kalwey, Head of the Division I C 3 in the German Federal Finance Ministry

 

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