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Many countries are struggling with debt defaults, leading to increased interest in complex financial instruments designed to speed up debt restructuring.
State Contingent Debt Instruments (SCDIs) are gaining attention for helping countries like Ukraine and Sri Lanka negotiate debt more effectively.
At its upcoming meeting, the Global Sovereign Debt Roundtable (GSDR) will address the use of SCDIs, reflecting their growing role in managing sovereign debt crises globally.
State Contingent Debt Instruments (SCDIs)
SCDIs are bonds that pay investors based on a country meeting specific economic or fiscal goals.
They aim to make it easier for countries to negotiate with bondholders by offering payouts linked to economic performance, such as GDP growth or tax revenue.
Countries can use these instruments to manage debt while still investing in public services and development.
Global Sovereign Debt Roundtable (GSDR)
The GSDR is a forum that brings together representatives from various countries, private lenders, and institutions like the World Bank and G20 to discuss sovereign debt issues.
Its focus is on process and standards (not to discuss country cases) and will not replace existing restructuring mechanisms such as the Common Framework.
Instead, it will support those mechanisms by fostering greater common understanding on concepts and principles, which will in turn facilitate individual restructurings.
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