Corporate and Household Debt Distress in Latvia: Strengthening the Incentives for Market-Based Approach to Debt Resolution
This paper reviews Latviaâ€™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. Latviaâ€™s experience with market-based debt resolution may provide insights on managing debt distress in other countries with limited fiscal resources.
|Date of creation:||01 Apr 2011|
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