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Global roundtable on sovereign debt to meet to discuss restructuring

Global roundtable on sovereign debt to meet to discuss restructuring

Global creditors will next week discuss including domestic debt in restructuring plans for countries in default, two sources with direct knowledge of the matter told Reuters, a sign of progress after months of delays.

At the technical meeting on September 15 of the Global Roundtable on Sovereign Debt Representatives will participate, probably at the deputy level, from the International Monetary Fund (IMF), the World Bank and the main economies of the Group of 20 (G20).

The talks will also discuss the risks of local debt restructurings, such as second-round effects, said one of the two sources, who spoke on condition of anonymity.

They are expected to set the stage for a higher-level meeting during the October meetings of the IMF and World Bank in Morocco, October 9-15.

Countries such as Sri Lanka and Ghana recently included some or all of their national sovereign debt in ongoing debt restructurings after defaulting, although Zambia did not do so.

There is no common restructuring model for countries in default, and governments often decide how to deal with local debt following an IMF debt sustainability analysis.

Foreign private creditors often push for burden sharing with domestic creditors during debt restructurings. Governments tend to be reluctant for fear that such a move could cause instability in their financial sector, as national banks and pension funds are often the main holders of these bonds.

The IMF and World Bank did not immediately respond to requests for comment.

The meeting will also be attended by representatives of official and private creditors, borrowing countries, debt experts and financial and legal advisors.

A previous technical meeting in June focused on deadlines, as consensus needs to be reached on the date from which new loans are excluded from a restructuring.

The roundtable was launched late last year and held meetings in February and April, amid growing concern about continued delays in ensuring debt treatment for defaulting countries holding talks with a wide variety of stakeholders, including the Paris Club, India and China, the world’s largest bilateral creditor.

Source: Reuters

Source: Gestion

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