Sovereign Debt Restructurings in Grenada PDF Download

Author: Mr.Tamon Asonuma
Publisher: International Monetary Fund
ISBN: 1484311035
Category : Business & Economics
Languages : en
Pages : 58

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Book Description
This paper documents the two debt restructurings that Grenada undertook in 2004–06 and 2013–15.Both restructurings emerged as a consequence of weak fiscal and debt situations, whichbecame unsustainable soon after external shocks hit the island economy. The two restructurings provided liquidity relief, with the second one involving a principal haircut. However, the first restructuring was not able to secure long-term debt sustainability. Grenada’s restructuring experience shows the importance of (1) establishing appropriate debt restructuring objectives; (2) committing to policy reforms and maintaining ownership of the restructuring goals; and (3) engaging closely and having clear communications with creditors.

Author: Mr. Tamon Asonuma
Publisher: International Monetary Fund
ISBN: 1484350278
Category : Business & Economics
Languages : en
Pages : 28

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Book Description
This paper examines the causes, processes, and outcomes of the two Belize sovereign debt restructurings in 2006–07 and in 2012–13 that occurred outside of an IMF-supported program. It finds that the motivation for the two debt restructurings differed, as the former was driven by external liquidity concerns while the latter was motivated by a substantial increase in the coupon rates and future fiscal solvency concerns. Despite differential treatment between residents and non-residents, both 2006–07 and 2012–13 debt exchanges were executed through collaborative engagement, due in part to the existence of a broad-based creditor committee and the authorities’ effective communication strategy. However, while providing temporary liquidity relief, neither of the debt restructurings properly addressed long-term debt sustainability concerns. Going forward, the success of the 2012–13 debt restructuring will still depend on the country’s ability to strengthen fiscal efforts and public debt management framework.

Author: Lorenzo Forni
Publisher: International Monetary Fund
ISBN: 1475526520
Category : Business & Economics
Languages : en
Pages : 42

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Book Description
This paper studies the effect of sovereign debt restructurings with external private creditors on growth during the period 1970-2010. We find that there are bad and good (or not so bad) debt restructurings for growth. While growth generally declines in the aftermath of a sovereign debt restructuring, agreements that allow countries to exit a default spell (final restructurings) are associated with improving growth. The impact can be significant. In general, three years after restructuring, growth is about 5 percent lower compared to countries that did not face restructuring over the same period. The exception is for final restructurings, which result in positive growth in the years immediately after the restructuring. Final restructurings tend to be better for growth because they reduce countries’ debt, with the strongest effect for countries that exit restructurings with relatively low debt levels.

Author: International Monetary Fund. Asia and Pacific Dept
Publisher: International Monetary Fund
ISBN: 1498341918
Category : Business & Economics
Languages : en
Pages : 50

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Book Description
his paper reviews the recent application of the Fund’s policies and practices on sovereign debt restructuring. Specifically, the paper: • recaps in a holistic manner the various policies and practices that underpin the Fund's legal and policy framework for sovereign debt restructuring, including on debt sustainability, market access, financing assurances, arrears, private sector involvement (PSI), official sector involvement (OSI), and the use of legal instruments; • reviews how this framework has been applied in the context of Fund-supported programs and highlights the issues that have emerged in light of recent experience with debt restructuring; and • describes recent initiatives in various fora aimed at promoting orderly sovereign debt restructuring, highlighting differences with the Fund’s existing framework. Based on this stocktaking, the paper identifies issues that could be considered in further depth in follow-up work by staff to assess whether the Fund’s framework for debt restructuring should be adapted: • first, debt restructurings have often been too little and too late, thus failing to re-establish debt sustainability and market access in a durable way. Overcoming these problems likely requires action on several fronts, including (i) increased rigor and transparency of debt sustainability and market access assessments, (ii) exploring ways to prevent the use of Fund resources to simply bail out private creditors, and (iii) measures to alleviate the costs associated with restructurings; • second, while creditor participation has been adequate in recent restructurings, the current contractual, market-based approach to debt restructuring is becoming less potent in overcoming collective action problems, especially in pre-default cases. In response, consideration could be given to making the contractual framework more effective, including through the introduction of more robust aggregation clauses into international sovereign bonds bearing in mind the inter-creditor equity issues that such an approach may raise. The Fund may also consider ways to condition use of its financing more tightly to the resolution of collective action problems; • third, the growing role and changing composition of official lending call for a clearer framework for official sector involvement, especially with regard to non-Paris Club creditors, for which the modality for securing program financing commitments could be tightened; and • fourth, although the collaborative, good-faith approach to resolving external private arrears embedded in the lending into arrears (LIA) policy remains the most promising way to regain market access post-default, a review of the effectiveness of the LIA policy is in order in light of recent experience and the increased complexity of the creditor base. Consideration could also be given to extending the LIA policy to official arrears.

Author: International Monetary Fund. Western Hemisphere Dept.
Publisher: International Monetary Fund
ISBN: 1513516183
Category : Business & Economics
Languages : en
Pages : 85

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Book Description
EXECUTIVE SUMMARY Extended Credit Facility (ECF) Arrangement. The program was approved on June 26, 2014 and the first review completed on December 12, 2014. Grenada has received SDR 4.04 million (about US$5.9 million) so far under the arrangement and the equivalent of SDR 2 million (about US$3 million) will be made available upon Executive Board completion of the second review. Debt restructuring. Grenada has achieved a critical milestone in its debt restructuring, reaching agreement on key restructuring terms with its largest private creditor group. The agreement implies a net present value reduction in the related debt of 54 percent and will reduce public debt by 13 percent of 2017 GDP once fully executed. The restructuring of Grenada’s debt with the Export-Import Bank of Taiwan Province of China at end-2014 reduced the stock of public debt by another 2 percent of GDP. The authorities expect to finalize negotiations with remaining creditors by end-2015. Program Performance. Overall program implementation remains solid. All but one quantitative performance criteria for the second review were met with wide margins. Major reforms of the fiscal policy framework to anchor debt sustainability have been completed, albeit with some delay, including new fiscal responsibility legislation and the reform of the bulk of the tax incentive regime to eliminate discretion. The strategy to reform parastatal entities has also been completed and its implementation started. Second Review. Discussions focused on meeting the 2015-16 fiscal targets and the structural reform agenda. Modifications are proposed to the 2015 performance criteria to accommodate one-time costs of structural reforms and to the ceiling on non- concessional borrowing to clarify when a loan is considered contracted. Proposed structural conditionality seeks the transparent and sustainable management of citizenship-by-investment receipts and to bring the chart of accounts in line with international best practice.

Author: International Monetary Fund. Finance Dept.
Publisher: International Monetary Fund
ISBN: 1475563361
Category : Business & Economics
Languages : en
Pages : 46

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Book Description
This paper discusses Ex Post Assessment of Longer-Term Program Engagement on Grenada. Grenada’s engagement with the IMF played an important role in supporting the small island economy after it was buffeted by major adverse shocks. IMF support catalyzed substantial donor aid in the wake of unprecedented damage from two hurricanes and provided additional resources when the global crisis hit. Key reforms were also advanced, including the implementation of a value-added tax and strengthening of the nonbank regulatory framework. Executive Directors have agreed that a new program should support urgently needed fiscal consolidation, promote faster and more inclusive growth, and focus on a few macro-critical reforms.

Author: International Monetary Fund. Western Hemisphere Dept.
Publisher: International Monetary Fund
ISBN: 1484301463
Category : Business & Economics
Languages : en
Pages : 71

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Book Description
This paper discusses Grenada’s Sixth Review under the Extended Credit Facility (ECF) Arrangement and Financing Assurances Review. The government met all continuous and end-December 2016 performance criteria and structural benchmarks. The economy grew by about 3.9 percent in 2016, reflecting continued strong construction activity and steady external demand for Grenada’s tourism services. The pace of restructuring of public debt has accelerated in recent months, and Grenada’s debt-to-GDP ratio declined to 83.4 percent at the end of 2016 from 108 percent in 2013. The IMF staff supports the completion of the Sixth Review under the ECF arrangement and the financing assurances review.

Author: International Monetary Fund. Finance Dept.
Publisher: International Monetary Fund
ISBN: 1484389360
Category : Business & Economics
Languages : en
Pages : 46

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Book Description
This paper discusses Ex Post Assessment of Longer-Term Program Engagement on Grenada. Grenada’s engagement with the IMF played an important role in supporting the small island economy after it was buffeted by major adverse shocks. IMF support catalyzed substantial donor aid in the wake of unprecedented damage from two hurricanes and provided additional resources when the global crisis hit. Key reforms were also advanced, including the implementation of a value-added tax and strengthening of the nonbank regulatory framework. Executive Directors have agreed that a new program should support urgently needed fiscal consolidation, promote faster and more inclusive growth, and focus on a few macro-critical reforms.

Author: International Monetary Fund. Western Hemisphere Dept.
Publisher: International Monetary Fund
ISBN: 1498342264
Category : Business & Economics
Languages : en
Pages : 23

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Book Description
This paper presents background on Caribbean small states as context for the main paper, “Macroeconomic Issues in Small States and Implications for Fund Engagement.” It draws on recent analytical work presented at a conference for policy makers in September 2012, in Trinidad and Tobago. Caribbean small states, while sharing many features of other small states (size-related macroeconomic vulnerabilities, lack of economies of scale, and capacity constraints) have specific characteristics which merit attention

Author: International Monetary Fund. Western Hemisphere Dept.
Publisher: International Monetary Fund
ISBN: 1498387896
Category : Business & Economics
Languages : en
Pages : 77

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Book Description
EXECUTIVE SUMMARY Extended Credit Facility (ECF) Arrangement: On June 26th, 2014, the Executive Board approved a three-year arrangement for a total amount equivalent to SDR 14.04 million (about US$21.7 million, 120 percent of quota). The equivalent of SDR 2.04 million was disbursed upon approval of the arrangement. The equivalent of SDR 2 million (about US$3 million) will be made available upon Executive Board completion of the first review. Recent Developments: The economy is slowly recovering from a protracted recession, but domestic demand remains weak. Financial balance sheets are strained by non- performing loans, private credit continues to contract, and inflation has been negative or low. Growth is expected to remain positive but below potential over the next two years, as private and public balance sheets are repaired. Discussions with creditors on a comprehensive restructuring of public debt have intensified. Program Performance: Policy implementation is off to a good start. The fiscal consolidation is proceeding as programmed and all quantitative performance criteria for the first review were met. Progress has also been made on the structural reform agenda, with two structural benchmarks met or expected to be met, and two to be finalized soon. In particular, the authorities overhauled the public financial management framework, prepared an initial strategy to strengthen weak public institutions and are modernizing the investment promotion framework. First Review: No substantive changes were made to the macroeconomic framework. Discussions focused on the fiscal outlook for 2014-15, and on structural reforms going forward. No changes are proposed to the programmed fiscal targets. Proposed new structural conditionality focuses on a continued strengthening of the fiscal policy framework through implementing regulations, debt management and revenue administration reforms, as well as a framework for sustainable use of receipts under the new citizenship-by-investment program. The program is still in early stages, and implementation risks remain.