Sovereign Debt

Since fiscal rules are not a panacea, and all of the economic, political, and financial forces that impact on sovereign creditworthiness cannot possibly be controlled, chances are that some governments will encounter debt-servicing difficulties when they least expect it. Certainly, to the extent that nations adhere to market-friendly policies that foster investor confidence and prosperity, and generate the budgetary revenues, export earnings, and capital inflows necessary to keep servicing debt obligations, their fiscal resilience will be enhanced. Sound liability-management practices can also make a major contribution to creditworthiness, because when the public debt exhibits a risk-averse currency, interest rate, and maturity structure, it should be able to withstand the temporary harm done by a natural disaster, or a sudden deterioration in financial market conditions or the terms of foreign trade. And last, but not least, prudential regulations, and sensible monetary and exchange rate policies, can make a major difference in terms of minimizing contingent liabilities arising out of the banking system, state-owned enterprises, and other risk pockets in the economy, thereby preventing a destabilizing jump in the public debt. These are the lessons from painful experience.

This chapter critically questions the ‘naturalisation’ of recourse to the market, namely, the process by which market devices and financial techniques were established and became unchallenged and uncontroversial technical issues. The management of public debt in financial markets was initially one among many strate- gies, and market devices became a naturalised way of financing the state only after long ideological struggles and administrative change.
Drawing on sociological studies of the long-term effects that the development and legitimisation of technical instruments have on public policy,4 I analyse state financing techniques as the products of a histori- cal process, which varies across countries and institutional contexts. The apprehension of the sovereign debt problem cannot be reduced to measures such as debt-to-GDP ratios ; for political and institutional constellations do matter. Throughout history, there have been multiple, non-market, professional tools and administrative apparatuses, which financed public spending and deficits.

This paper argues that the development of a regime for sovereign debt workouts has created an asymmetry between the rights and interests of sovereign lenders and those of the population of a debtor state. It first analyzes the impact of sovereign debt workouts on human rights. Subsequently, it explores avenues for the justification of adjustment measures affecting human rights with a view to reconciling human rights with adjustment policies and rectifying the asymmetrical relationship. This includes the proposal of a checkbox test for adjustment programmes with retrogressive effects for human rights. Further, the paper discusses which actors besides the debtor state are bound by human rights. The concluding section argues that human rights impact assessments, among other procedural tools, might help reconciling the rights and interests of people living in debtor states with creditors’ rights and interests and cure the present asymmetrical relationship.

With increasing liquidity of the Indian sovereign debt market since 1997, it has become possible to estimate the term structure in India. However, the market is characterised by several frictions that cause individual securities to be priced differently from the 'average' pricing in the ...

This article offers a new interpretation of Marcel Mauss's The Gift. It situates Mauss's argument within his broader thinking on the politics of sovereign debt cancellation and the question of German reparations paid to the Allies after World War I. Mauss applauded the policies of reparation and debt cancellation proposed by the French " solidarist " activists who were responsible for inclusion of reparations provisions in the Versailles Treaty. But Mauss was also aware that their legal mobilization could not by itself restore a sense of solidarity among European peoples. Broader systems of political alliance and anthropological norms of gift-making were also necessary. In Mauss's writings on war reparations, as in The Gift, he described the legal, political, and macrostructural dynamics at work in the settlement of reparations and sovereign debts, which he differentiated from the dynamics at work in the speculative logics of financial capitalism. In doing so, Mauss provided insights into the settlement of sovereign debt crises, which still agitate the international community today.

ABSTRACT The sovereign debt crisis in the euro area is a symptom of policy failures and deficiencies in – among other things – fiscal policy coordination. The first nine years of the euro were not used effectively in order to improve public finances, while the Stability and Growth Pact was watered down. Spillovers from the financial and economic crisis compounded fiscal difficulties in the euro area, especially in certain member countries. This paper looks back at the history of fiscal policies and rules in Economic and Monetary Union (EMU). It makes proposals to strengthen fiscal policy governance that go well beyond the legislation set to be adopted in autumn 2011. The authors consider these additional governance measures to be essential for effective policy coordination and sound public finances in the future.

El canje de deuda de 2005 fue la primera etapa de un largo proceso de normalización de pasivos públicos en default que culminó en 2016. Además de sentar las bases de las etapas que le siguieron, la estrategia de manejo de la deuda implementada por el gobierno de Néstor Kirchner inauguró una orientación que se continuaría hasta 2015 y sentó un precedente novedoso respecto a la política con la que los estados pueden impulsar procesos de reestructuración de deuda en el actual estadio de la globalización financiera. En este escrito presentaremos el caso, analizaremos la estrategia desarrollada por el gobierno argentino y los principales resultados de su política de manejo de la deuda en la etapa, para finalmente analizar sus particularidades y reflexionar sobre las posibilidades abiertas por el mismo para la resolución de crisis de deuda en países en desarrollo en el marco de la arquitectura financiera internacional existente.

In this interview, which I translated with Tom Vandeputte, the Italian philosopher and sociologist Maurizio Lazzarato elaborates and extends some of the arguments developed in his book "The Making on Indebted Man".

The interview was conducted by Antonio Alia, Vincenzo Boccanfuso and Loris Narda. The original Italian version has been published via UniNomade in May 2012 under the title ‘Sovvertire la macchina del debito infinito’.

В статье раскрывается проблематика недостаточности и неэффективности существующих механизмов и принципов реструктуризации суверенных долговых обязательств государств в контексте современной тенденции глобализации международного права. Особое внимание уделяется принципам деятельности и механизмам реструктуризации суверенных долгов в рамках Парижского клуба кредиторов.

Sovereign debt is financial (dis)advantage with several implications for economy and defense, in general. It affects directly military capabilities transformation and supports defense policy development taking into account defense costs made by virtue of lending facilities. Based on it, researching sovereign debt security is a very important tool in managing and minimizing security risks in the public sector and strengthening dynamic security environment. The aim of this paper is to mark the main theoretical and practical aspects of sovereign debt security influence for security environment and its public perception.

The year 2002 would be remembered in the European Union as the year the ‘Euro’ officially became the common legal tender of the ‘Eurozone’ comprising presently of 19 member states. Exactly seven years after, a full blown banking and sovereign debt crisis was evident in the monetary union which raised fresh financial concerns the world over after that of the 2007-2008 global financial crisis. The Eurozone debt crisis that caught the international community by surprise, began with the shocking revelation on the humongous external debt hovering over Greece. Afterwards, the ballooning debt-to-GDP ratio of other peripheral states in the Euro Area - Italy, Ireland, Portugal and Spain surfaced thus giving rise to the acronym G.I.I.P.S in reference to the five indebted countries in the Eurozone. This paper therefore examines the sovereign debt crisis of E.U member states belonging to the Eurozone and the effect it has had on their economic growth. With Greece as the case study, the nature, causes and rescue packages so far adopted at salvaging the Eurozone debt crisis since 2009 till date were duly accounted for via an historical and empirical approach which was heavily dependent on secondary sources of quantitative data.

Introductory chapter of PhD thesis: 'Why Not Default? The Structural Power of Finance in Sovereign Debt Crises.' Defended (without corrections) at the European University Institute in Florence on May 19, 2016.

This thesis aims to answer a simple question with far-reaching implications: why do heavily indebted peripheral states not default on their external debts more often? Building on case studies of sovereign debt crises in Mexico (1982-’89), Argentina (1999-’05) and Greece (2010-’15), the findings of this research demonstrate that the traditional explanations of debtor compliance proposed in the economics literature — centering on reputation, sanctions and democratic institutions — hold limited explanatory power.

Instead, the thesis spells out a political economy approach to sovereign debt that recognizes the importance of social conflicts and power struggles over the distribution of adjustment costs. In these conflicts, it is argued that finance possesses a unique advantage over indebted states: through their capacity to withhold the short-term credit lines on which the latter depend for their reproduction, lenders can inflict debilitating spillover costs that greatly limit the debtor’s room for maneuver. This structural power of finance has increased markedly as a result of globalization and financialization, and the main objective of this project is to identify the exact mechanisms through which it operates and the conditions under which it is effective and under which it breaks down.

The findings highlight the importance of debt concentration in the lending structure (which eases the formation of creditors’ cartels, strengthening market discipline); the exposure of big banks and institutional lenders in core countries (which compels creditor states and international financial institutions to intervene as lenders of last resort and provide emergency loans under strict policy conditionality); and the bridging role fulfilled by bankers and elites inside the borrowing country (which endows them with a privileged position in financial policymaking and internalizes fiscal discipline into the debtors’ state apparatus). The thesis concludes by spelling out the implications of these findings for the quality of democracy and the study of political economy more generally.

Global financial markets are volatile right now and will remain so for the next 2-years. Equity markets are shaky. Investors risk appetite is suddenly moving to commodities. Bond market is precarious as Sovereign debt risk goes high. Global economy is slowly moving into recession which will be either U or W-Shaped. Recovery figures are questionable and are creating doubts among investors. So, where are we heading towards? As we navigate through treacherous times, Islamic financial market provides a new hope without speculation and exploitation of resources. The emergence of Sukuk Islamic Bond in the financial markets heralds a new era which can provide much needed financial stability and mitigation of risk in these arduous times. With advent of Sukuk in the financial world, the market players have got a new option to invest into this asset which hold considerable value and benefit for all. This bond promises to all investors an equitable return which is justifiable and above all saf...

The UK, US, EU response to the catastrophic economic impact of COVID on Africa, Asia & Latin America is A KICK IN THE TEETH—and this is to put it mildly! The poorest countries, who account <3% of private and public debt owed by so-called developing countries, can request postponement (!!!) of interest payments on debt owed to G7 governments until June 2021 - the so-called 'Debt Service Suspension Initiative'. And that’s it!!! Private lenders, i.e. the super-rich loan-sharks, are refusing to participate, demanding every penny be paid on time, whatever the cost to public health.
The biggest scandal of all is that there’s no scandal!

The present work addresses the problem of the "Vultures Funds" in the Sovereign Debt Restructuration. The main objective is to analyze if the creation of an institutional debt restructuration mechanism, called International Sovereign Debt Tribunal based on the substantive and adjective principles of Bankruptcy, could end with the disruptive strategy of the Vultures Funds and, at the same time, provide an order, timely, foreseeable and effective framework for restructuration. The work is
developed principally on the field of the science of law, however it contains social, economic and political analysis that are indispensable to understand the complex issues related to this topic. In order to that the following topics are analyzed; the current financial architecture: main characteristics, strengths and weaknesses; The Vultures Funds: conceptualization, strategy, origins, composition and consequences for the countries; and finally an institutional mechanism is proposed in order to end with the vulture funds in the global financial world. From our perspective, the Vulture Funds are a serious threat to fundamental Human Rights of the population, altering the burden of the debt and embezzling resources that are use in other areas of development, at the same time, their speculative behavior, with base on the abuse of right, gravely disturb the restructuration processes and turn them to be more
difficult, complex and costly. For this reason we provide in this work a mechanism to eliminate this harmful behavior from the financial world.

To answer the problematic of the present study that focuses on the extent to which the Islamic sovereign Sukuk are included in Financing Government projects and treatment the Public Budget deficit. various concepts concerning the Public Budget and Islamic Sukuk. The descriptive analytical method was followed since it is appropriate to display the concepts that are associated with the balance sheet and Islamic Sukuk. A case study has been adopted because the experience of some countries in the field of financing government projects through Islamic sovereign Sukuk is done. The study offers important results, such as: the Islamic sovereign Sukuk represents the most appropriate solution for the state in financing its projects and treatment the deficit in the Public Budget, since it is characterized by legitimacy credibility and economical efficiency.

Essay written for:
The Hague Centre for Studies and Research
"The Legal Implications of Global Financial Crises"
Directors of studies: prof. G. Bastid-Burdeau and prof. M. Waibel
The Hague, 19 August – 6 September 2013
Last revised September 2014
(forthcoming)

The purpose of the paper is to assess whether, in light of recent developments, the Paris and the London Clubs can still play a leading role in sovereign debt restructurings.
After a description of the Paris and the London Clubs, which developed as the preferred fora for the restructuring of debts owed by a State to homogeneous groups of creditors (other States and commercial banks respectively), the study focuses on the creditor structure of sovereign bonds.
It is argued that the fragmentation of the bondholders’ profile can pose a host of complex issues to the development of a dedicated workout mechanism for the restructuring of sovereign bond debt. In particular, the challenges posed by supranational bondholders are yet to be carefully addressed, while the principles and practices developed by the Paris and the London Clubs can only be of a limited use.

Good faith is insufficient in bringing about a multilateral public order. An international community that applies the principle of good faith effectively does not exist. Arguably, rather than a robust juridical mechanism, good faith represents common sense in international law. However, an effective and functioning multilateral public order needs more than that. This becomes all the more palpable in respect of issues such as external sovereign debt, where public international law is inchoate.

The scope of protection, which can be provided by treaty arbitration to investors with regards to contractual disputes where a State or a State entity is the counterparty, continues to be a much-debated area of international investment law.  As the number of investment arbitration cases continues to increase and investors tend to resort for treaty arbitration for a ever-wider range of disputes that were traditionally dealt within the domestic adjudication of host States, the uncertainty about the scope and meaning of “umbrella clauses” persists, perhaps due to the scale of what is at stake floating in the relevant legal quagmire.

De l’engouement lié à la prolifération des collectifs locaux, dès la fin de l’année 2011, au ralentissement général de leurs activités à partir de 2014, les collectifs pour un Audit Citoyen (CAC) de la dette publique offrent un terreau propice pour interroger les frontières que l’on sait désormais poreuses entre les espaces savant et militant. S’appuyant sur des formes d’expertise de l’action collective (étude des budgets publics, interpellation auprès d’élus locaux, recours en justice), les « auditeurs-citoyens » ont fait le pari d’un militantisme « technique », permettant de refaçonner le répertoire traditionnel de l’action collective protestataire.
En s’inscrivant dans une sociologie de l’action collective, ce travail revient sur les ressorts d’une expérimentation « citoyenne » de contestation des politiques publiques, à partir d’une approche multi-localisée des finances publiques.


Mots-clés : Audit citoyen, audit public, auditeurs-citoyens, citoyenneté active, contre-expertise, entrepreneurs de morale, expertise citoyenne, dette, dette illégitime, dette publique, emprunts structurés, emprunts toxiques, finances locales, finances publiques, interpellation, label citoyen, problème public, transparence.

Access to the international bond market is a novelty for African countries, the number of African countries which access to this market continues to grow over time. By the 28thDecember 2013, there were about 12 countries in the region that have had access to that market. Knowing that the international economic environment and regional context were favorable to the access of emerging and developing countries in international bond markets, most of these countries have chosen to issue international bonds for at least one of the three following objectives: Find funding for local infrastructure projects, make an issue that can serve as a benchmark for potential future public and private issues and issue to restructure maturing debt that cannot be honored. The consequences of these issues have been rather favorable for most of these countries which have largely achieved the desired funding and have known for some improved fiscal discipline and in some cases, an apparition of decentralized local authorities and some private companies in these markets.
The State of Cameroon is one of sub-Saharan African countries that have not yet acceded to this market. Thus, based on the experience of sub-Saharan Africa, the Cameroonian government should integrate international bond issues as a potential means of funding. It should in addition take advantage of the national economic context and of the international economic environment to make access to that market. However, an analysis based on costs and risks must first be carried out in comparison with other means of financing by taking into account the strategic and operational considerations including the choice of characteristics, the legal environment, advisers and the lead manager.

"Is there more than a superficial family resemblance between the emergencies we suffer on a daily and on an epochal basis - due dates, expiry dates, statutes of limitation, biological clocks, revolutionary crisis points, environmental tipping points, pandemic turning points, messianic end times? The deadline invokes the implacable indifference of measured time, but the manner in which it imposes itself is anything but uniform. Like all emergency measures, deadlines are coercive rituals that distribute privilege unevenly - limits are announced, extensions are granted, penalties are imposed, time runs out faster for the disenfranchised. The deadline (like death itself) is a ‘real abstraction': it universalizes itself in a palpably discordant fashion."

This was written (what now feels like) an eternity ago, pre-COVID days.  It's the introduction to a longer ongoing book project, going by by the same name (I think).  I warmly welcome any suggestions / feedback.  The book is being written in short sections, and branches out in different directions, including the ones mentioned in the opening sentence.  When the virus hit I was working on a chapter called "Freud sets a deadline" (on the Wolfman case, trauma, and the temporality of transference), as well as a chapter on the carceral space/time of debt and race. 

I hadn't been thinking of pandemic politics when I started writing.

I delivered this last spring, as the first annual Gillian Rose Memorial Lecture (2019) at the Centre for Research in Modern European Philosophy at Kingston University in London.  It was recently published as a pamphlet which, however, has not seen the light of day because of COVID, but the electronic pamphlet has been published electronically (open access) and can be retrieved through the CRMEP website.  Thanks again to Tom Vaswani, Peter Osborne, Howard Caygill, and Jacqueline Rose.
https://www.kingston.ac.uk/faculties/kingston-school-of-art/research-and-innovation/crmep/crmep-books/?fbclid=IwAR0vAdkCDfxMt9U-u-XFswbcqxMSyQCiKmvvpGOYe0RTHDOvlSJauWYXP2o

Pubblicato in :

https://www.startmag.it/economia/ecco-perche-il-mes-sara-una-sciagura-per-litalia-laudizione-di-giacche-cer/

https://www.camera.it/application/xmanager/projects/leg18/attachments/upload_file_doc_acquisiti/pdfs/000/002/779/Memoria_Giacché.pdf

In this study, we try to explore the effects of globalization and international integration on developing countries’ external debt in 1980-2010 time period. As known, the developing world consists of countries which desire to reach to the developed countries in economic sense. These countries head towards external debt, as it is difficult to realize their development with their insufficient internal sources. In recent half century, the oil shocks in 1973 and 1979, and the debt crises resulted, had been a turning point in the operation of decision mechanisms. Even the banking and financial crisis in 1990s and 2000s, developing countries continued to find out extra sources from internal and external markets. Especially in the last ten years, however, as a result of economic integration, internal and external sources are intertwined and substituted for each other. The study concentrates on the demand side of the external debt rather than the supply side; but occasionally, with fiscal and economical policies as well as international policies are mentioned. It is clear that supporting populist approach or policies of developing countries may lead them into new debt spirals which were also experienced historically. After theoretically examining the external debt, its determinants are empirically analyzed by using panel data analysis. By testing the models, results show that GDP growth ratio, fixed capital formation, population rates, terms of trade, capital flight, external debt services, external debt interest payments, urbanization, general government consumption expenditure and financial liberalization are the main determinants of external debt in developing countries. Keywords: External Debt, Developing Countries, Turkish Economy, Economical and Fiscal Structure, Panel Data Analysis Method. 1980-2010 yılları arası dönemde küreselleşme ve uluslararası entegrasyon faaliyetlerinin gelişmekte olan ülkelerde dış borçlanma üzerinde yarattığı etkiler bu çalışmanın araştırma konusunu oluşturmaktadır. Bilindiği üzere, gelişmekte olan ülkeler iktisadi anlamda gelişmiş olan ülkeleri yakalama gayreti içerisinde bulunan ülkelerdir. Bu ülkeler iktisadi sistem içerinde söz konusu kalkınma hamlesini kendi kaynakları ile gerçekleştirmeleri güç olduğu için dış kaynaklara yönelmektedirler. Dış borçlanmanın son yarım asırlık gelişiminde 1973 ve 1979 petrol şoklarının ve neden olduğu borç krizleri 1980’li yıllarda karar mekanizmalarının işleyişi açısından bir dönüm noktası olmuştur. Benzer şekilde, 1990’lı ve 2000’li yıllarda da gelişmekte olan ülkeler bankacılık ve finansal krizlerle sarsılırken iç ve dış piyasalardan borç arayışlarını sürdürmüşlerdir. Ancak özellikle son on yıllık sürece bakıldığında, ekonomik entegrasyon sonucu, iç ve dış kaynaklar birbirleri ile iç içe geçmiş ve birbirlerini ikame eder hale gelmiştir. Çalışmada dış borçlanma konusu arz tarafından çok talep yönüyle ele alınmış; ancak yeri geldikçe, mali ve iktisadi politikalar yanında uluslararası politikaların da aşırı borçlulukta rol oynadığına değinilmiştir. Yine bu çerçevede, popülist politikaların desteklenmesinin borç sarmallarının yeniden oluşmasına yol açabileceği belirtilmiş ve sözü edilen durumun geçmişteki örneklerine atıflarda bulunulmuştur. Gelişmekte olan ülkelerde dış borçlanma iktisadi ve mali politikalar perspektifinden kuramsal olarak incelendikten sonra belirleyici unsurları panel veri yöntemi ile ampirik olarak analiz edilmeye çalışmıştır. Test edilen modellerin ardından gelişmekte olan ülkelerde; GSYİH büyüme oranları, sabit sermaye oluşumu, nüfus, dış ticaret hadleri, sermaye kaçışları, dış borç servisleri, dış borç faiz ödemeleri, kentsel nüfus, kamu kesimi tüketim harcamaları ve finansal liberalizasyon değişkenlerinin dış borçlanmayı anlamada belirleyici olduğu sonucuna ulaşılmıştır. Anahtar Kelimeler: Dış Borçlanma, Gelişmekte Olan Ülkeler, Türkiye Ekonomisi, İktisadi ve Mali Yapı, Panel Veri Analizi Yöntemi.

This essay provides a historical geographical political economy of the deep connection between global capitalist finance, global flows of capital in the form of money, and modern imperialism. It argues that the money-power of capital to appro- priate living labor and extra-human natures has expressed itself in particular violent ways in the spaces of the global capitalist economy succes- sively referred to as the peripheries, the colonies, the Third World, and the Global South. The essay suggests that a crucial factor of explanation for the violence of the money-power of capital in those spaces is that they have retained a subordinate positionality in the network of space and power relations within which money-capital flows. This has been largely due to a multitude of imperialist policies and practices on the part of advanced capitalist economies and powerful agents and institutions located within them.

Repeated crises have proven credit rating agency (CRA) models/methods erroneous and ‘business-as-usual’ unsustainable. Nevertheless, considerable dubious ‘default risk’ management and technoscientific capitalist expertise remain unchanged. Unpacking sovereign ratings, we appreciate how ‘debt sustainability analysis’ (DSA) distortions underpin expertocratic CRA (default) anomaly. Their neoliberal ‘politics of limits’ performance helps market (shareholder) imperatives trump those of democratic (stakeholder) politics. Given surging debt (distress) to remedy Covid-19-induced shocks, ratings aid constitute and (re)validate the subjectivities/affinities and organizational conditions advancing a ‘self-equilibrating’, ‘self-generative’ agencement political economy of creditworthiness (PEC). Antagonizing sustainable budgetary government’s programmatic/expertocratic and operational/democratic asymmetry, econophysics ratings diminish fiscal sovereignty. Universal PEC management through hybrid credit risk/uncertainty qualculation mitigates negative externality contestation shielding CRAs from serious reform. Ratings procyclicality and contagion reinforce this precarious sociotechnical agencement PEC as the status quo.

Although precarious credit risk management and technoscientific expertise precipitate and exacerbate repeated crises, unfortunately, much remain widespread and virtually unaccountable. Especially evident in the ratings space, the article argues how geometric (sovereign) ‘debt sustainability analysis’ (DSA) informs (fixed-income) futurity financialization. This constitutes and reproduces an (artificial) ‘inertia’ buffering against serious contestation and organizational reform. Advancing the study of organizational change through economic sociology, we problematize credit rating agency (CRA) and investor hybrid ‘default risk/uncertainty’ DSA managerial modalities of expertise mutual mitigation effects. Algorithmic/geometrics-based ‘expertocracy’ – knowledge-based expert rule – (re)validates the organizational conditions and broader market affinities embedding a (disinflationary) political economy of creditworthiness (PEC). Unpacking S&P, Moody’s, and Vanguard platforms reveals how sociotechnical DSA methods/modeling synergies promote ‘business-as-usual’. Studying scores passive/active management facilitation in their operational contexts better explains their analytical, organizational, and normative CRA correspondence, perpetuating crisis-prone PEC conditions. Ratings (reflexive) portfolio performance reinforces a (neoliberal) referential/data infrastructure PEC status quo, we document, amplifying national democracy and global (corporate) expertocracy asymmetries. Necessary for rebalanced alternatives, our scrutiny aids disturb seemingly ‘self-systemic’, thereby ‘self-regulating’, (neoliberal) capitalist agencement PEC dominance. Otherwise, increasingly, market instability, authoritarian populist backlash, and climate crises jeopardize ratings programmatic.