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Restructuring Domestic Sovereign Debt: An Analytical Illustration

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  • Mr. David A. Grigorian

Abstract

Sovereign domestic debt restructurings have become more common in recent years and touched upon a growing share of total public debt. This paper offers a simple framework for policymakers to think about the decision whether to restructure domestic sovereign debt as part of an effort to reduce overall public indebtedness. It also highlights a rather wide range of technical, legal, and operational issues a sovereign may face while restructuring domestic debt. As expected, factors such as debt reduction required to achieve sustainability, fiscal savings from a restructuring, and economic costs of a restructuring are key inputs into the decision making regarding a restructuring, but so are factors such as the composition of debt, financial stability costs, and crisis preparedness, all of which are discussed in the paper.

Suggested Citation

  • Mr. David A. Grigorian, 2023. "Restructuring Domestic Sovereign Debt: An Analytical Illustration," IMF Working Papers 2023/024, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2023/024
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    Cited by:

    1. Samarakoon, Lalith P., 2024. "What broke the pearl of the Indian ocean? The causes of the Sri Lankan economic crisis and its policy implications," Journal of Financial Stability, Elsevier, vol. 70(C).

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