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Corporate and Household Debt Distress in Latvia; Strengthening the Incentives for Market-Based Approach to Debt Resolution


  • Magnus Saxegaard
  • Michaela Erbenova
  • Yan Liu


This paper reviews Latvia’s efforts to manage the increase in debt distress resulting from the unwinding of the 2000-07 credit boom and spillovers from the global financial crisis. The authorities have designed a strategy that strengthens incentives for marked-based debt resolution by improving the legal framework for credit enforcement, introducing tax incentives for debt write-downs, and strengthening financial sector supervision. These measures have started to yield results, but further steps are needed to speed up bankruptcy procedures and reduce credit enforcement costs. Latvia’s experience with market-based debt resolution may provide insights on managing debt distress in other countries with limited fiscal resources.

Suggested Citation

  • Magnus Saxegaard & Michaela Erbenova & Yan Liu, 2011. "Corporate and Household Debt Distress in Latvia; Strengthening the Incentives for Market-Based Approach to Debt Resolution," IMF Working Papers 11/85, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:11/85

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    References listed on IDEAS

    1. Anne Krueger & Aaron Tornell, 1999. "The Role of Bank Restructuring in Recovering from Crises: Mexico 1995-98," NBER Working Papers 7042, National Bureau of Economic Research, Inc.
    2. Mark R. Stone, 2000. "Large-Scale Post-Crisis Corporate Sector Restructuring," IMF Policy Discussion Papers 00/7, International Monetary Fund.
    3. Fabian Valencia & Luc Laeven, 2008. "Systemic Banking Crises; A New Database," IMF Working Papers 08/224, International Monetary Fund.
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    Cited by:

    1. Yan Liu & Christoph B. Rosenberg, 2013. "Dealing with Private Debt Distress in the Wake of the European Financial Crisis A Review of the Economics and Legal Toolbox," IMF Working Papers 13/44, International Monetary Fund.
    2. Teresa Buchen & Marcus Drometer & Katrin Oesingmann & Timo Wollmershäuser, 2016. "Managing Household Debt in Croatia," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(1), pages 12-16, April.
    3. International Monetary Fund, 2013. "Republic of Latvia; Selected Issues," IMF Staff Country Reports 13/29, International Monetary Fund.
    4. International Monetary Fund, 2015. "Republic of Slovenia; Selected Issues Paper," IMF Staff Country Reports 15/42, International Monetary Fund.
    5. Dorothee Bohle, 2017. "Mortgaging Europe’s periphery," LEQS – LSE 'Europe in Question' Discussion Paper Series 124, European Institute, LSE.
    6. Zuzana Smidova, 2015. "Policy areas for increasing productivity in Latvia," OECD Economics Department Working Papers 1255, OECD Publishing.

    More about this item


    Debt restructuring; Latvia; insolvency law; debt; restructuring; insolvency; loans; Other Substantive Areas of Law: General;

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