"UNCTAD Chief Calls for Permanent Sovereign Debt Restructuring System"

" UNCTAD Chief Calls for Permanent Sovereign Debt Restructuring System \r\n\r\nThe global financial architecture needs a permanent mechanism for restructuring sovereign debt, as measures currently in place have fallen short for creditors and borrowers alike, the head of the UN Trade and Development agency told Reuters.\r\n\r\nA raft of recent defaults from Zambia to Ethiopia have fuelled a debate about how to ensure that countries in distress can achieve a swift and smooth debt restructuring that would help them return to a path of growth and rising investment.\r\n\r\n\u201cWhat has happened is that there are ad-hoc mechanisms put in place when the problem comes, (but) there is no permanent institution or system that is there all the time dealing with debt restructuring,\u201d UNCTAD secretary-general Rebeca Grynspan said on the sidelines of the UN General Assembly in New York.\r\n\r\nTalk of a sovereign debt restructuring mechanism is not new. The International Monetary Fund (IMF) spearheaded a push in the early 2000s but that did not gain traction, Grynspan said.\r\n\r\n\u201cMaybe we can create new momentum to take this question seriously.\u201d\r\n\r\nEfforts to reshape the global debt infrastructure have not been met with urgency, partly because the emerging markets sovereign bond market has of late been resilient.\r\n\r\nYet two in five developing economies are at some level of debt distress. Debt-servicing costs are estimated to hit US$400 billion\u00a0this year and over 3 billion people live in countries that spend more on debt servicing than on education or health.\r\n\r\nDebt sustainability assessments should not only focus on the capacity to pay, but also the capacity to grow, Grynspan said.\r\n NO LEARNING CURVE \r\nSome advances have been made, especially in 2014 with the addition of collective action clauses (CACs) \u2013 making it much harder for holdout investors to push for bigger gains and prolong the debt rework \u2013 which have sharply cut the time a country remains in default.\r\n\r\n\u201cIt is important to maintain the collective clauses and see how they have worked and how we can improve them,\u201d she said, but every case is a specific fix, and there is \u201cno learning curve.\u201d\r\n\r\n\u201cIt will be important for the countries that have gone through the process to establish a dialog with all the countries that may face a debt restructuring,\u201d she said, adding more rules of the game would increase overall transparency.\r\n\r\nThe\u00a0Common Framework, a 2020 initiative of the Group of 20 to streamline debt restructurings, created frustrations for creditors and borrowers. Only four countries have signed up for it.\r\n\r\nGrynspan said she was critical of the Common Framework, and pointed to the length of time it took to put together deals for Zambia and Ghana.\r\n\r\n\u201cYou have 40% of the developing countries in debt distress, and that happened because of systemic shocks which are more and more common. If it takes you three or four years for three countries, imagine if you have 10.\u201d"

"UNCTAD Chief Calls for Permanent Sovereign Debt Restructuring System"

BoG Signals Monetary Policy Rate Reduction with Decreased Interest Rate on Own BillsAMP

Ghana Gold Coin Valued at GHS 36,058.11 per Ounce AMP

GSE Composite Index Declines as Market Capitalization Slips by GHS 72.72mAMP