The Economic Aspects of Sovereign Debt Restructurings

When discussing a sovereign debt restructuring, it is important to recognize that conducting one is merely a means to an end, and that a debt restructuring cannot meaningfully be viewed as a goal in itself. It can only serve the purpose of helping to reduce the overall burden of public debt in advanced economies, where generally the sovereign cannot declare bankruptcy. A sovereign debt restructuring is only one of several ways in which a country's public sector burden can be reduced, and a meaningful cost-benefit analysis must consider alternative and complementary ways to achieve this aim.