IDEAS home Printed from https://ideas.repec.org/p/unc/dispap/198.html
   My bibliography  Save this paper

Responsible Sovereign Lending And Borrowing

Author

Listed:
  • Lee C. Buchheit
  • G. Mitu Gulati

Abstract

There are three reasons for attempting to reach a common understanding of the responsibilities of sovereign borrowers and their lenders. First, the flow of capital to sovereign debtors is exceptionally important to the world economy. Industrialized countries rely on it to finance their budget deficits, these days to a breathtaking extent. Developing countries need it to develop. Misbehaviour, either by the sovereign debtors or by the creditors, destabilizes this key component of the international financial system, making credit less available and more costly. Second, sovereign finance is uniquely unforgiving of mistakes. Unlike corporate or personal debtors, sovereigns do not have access to a formal bankruptcy process in which insupportable liabilities can be adjusted according to pre-established rules. From a legal standpoint, sovereign debts are therefore ineradicable absent the consent and cooperation of the creditors. Unfortunately, the process by which that consent and cooperation must be sought – sovereign debt restructuring – remains unpredictable and disorderly. Third, the human cost of prodigal sovereign borrowing, reckless sovereign lending or incompetent sovereign debt restructuring is incalculable. Perusing a major international newspaper on any day of any year is all that is required to make good this proposition. A consensus about the responsibilities of sovereign borrowers and lenders, together with improvements in the way in which sovereign loans are planned, executed, documented and, when necessary, restructured, will directly affect the lives of most of the people that live on this planet.

Suggested Citation

  • Lee C. Buchheit & G. Mitu Gulati, 2010. "Responsible Sovereign Lending And Borrowing," UNCTAD Discussion Papers 198, United Nations Conference on Trade and Development.
  • Handle: RePEc:unc:dispap:198
    as

    Download full text from publisher

    File URL: http://www.unctad.org/en/docs/osgdp20102_en.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Porzecanski, Arturo C., 2017. "Human Rights and Sovereign Debts in the Context of Property and Creditor Rights," MPRA Paper 79123, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unc:dispap:198. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joerg Mayer). General contact details of provider: http://edirc.repec.org/data/unctach.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.