A man wearing protective face mask walks in front of closed stores after the city government decreed the closure of shops and stores as a precautionary measure against coronavirus disease (COVID-19) in downtown Sao Paulo, Brazil, March 20, 2020.

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Sovereign debt relief in the global pandemic: Lessons from the 1980s

Policy Briefs 20-13
Photo Credit: REUTERS/Amanda Perobelli


The coronavirus pandemic and an unprecedented global recession have triggered fears of a debt crisis requiring massive intervention by international financial institutions as well as debt restructuring by private and official creditors. Truman draws two lessons for the current crisis, based on his ring-side experience during the debt crises of the 1980s. First, the initiation of debt relief will require a broad consensus among four groups: the borrowing countries, their foreign creditors, the authorities of the countries in which those creditors are located, and international institutions. Reaching consensus takes time. Second, implementation of the consensus framework will be case by case, because of differences in the political and economic circumstances of each country, which will militate against simple replication for different countries and against implementation all at the same time. Any framework will not be self-implementing. While the call for rapid action is understandable, applying a one-size-fits-all approach will not be possible.

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The data underlying this analysis are available here [zip].

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