The global economy avoided what could have been a systemic debt crisis during the turbulence of recent years, but vulnerabilities remain amid high debt servicing costs that pose an important challenge for low and middle-income countries. Some may yet confront major tests.
When countries do falter on debt, restructuring is critical to containing the damage. Restructuring should be as quick as possible because delays deepen distress by making adjustment harder and adding to the costs for both debtors and creditors. Longer waits leave people suffering when they lose jobs and face increasing poverty, while creditors watch their losses mount as they wait for recovery. Its a lose-lose situation.
While some sovereign restructurings have faced s…
Read the full article at: https://www.imf.org/en/Blogs/Articles/2024/06/26/sovereign-debt-restructuring-process-is-improving-amid-cooperation-and-reform