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The research results on the global problem of household debt growth, its causes, consequences, social context, and influence on the formation of aggregate demand are presented. It is substantiated that with the growth of debts, households are losing their share in aggregate demand, and the state is becoming an increasingly influential player compared to others due to the strengthening of fiscal and regulatory government influence. Facing the increasing debt pressure, households start reducing consumption, thus negatively affecting aggregate demand. The government, on its part, trying to improve the situation, increases subsidies and provides policies that encourage banks to restructure loans, develops restructuring programs, etc. These trends are proven to be of an urgent character and should not be routinized, in order not to distort the market environment or increase the direct influence of the state on purely market processes. The analysis of global experience, carried out in the article, shows that in the condition of economic destabilization debt restructuring is the only way to help the population out of the debt trap. Special attention is paid to the analysis of the ways to harmonize the accumulation of household debt through restructuring, to identify its market mechanisms, and to prove that the state should provide extensive assistance to households trying to overcome the debt trap. Three options for the state participation in the restructuring process have been identified: institutional participation (when the state only provides regulatory support); design and implementation of state restructuring programs; adoption of regulations on compulsory restructuring. New Ukrainian norms and regulations related to forced debt restructuring are analyzed, and their social context is proved to be contradictory. On the one hand, the adoption of corresponding laws became a significant step towards maintaining the social stability of the Ukrainian population against the background of the growing poverty and increasing total indebtedness of the people (even in the sphere of payments for public utility services), and the growing currency risks. On the other hand, Ukrainian market players often show moral hazards of non-compliance with the conditions of debt discipline, which have become part of the financial behavior, negatively affecting the general financial culture.

This article advances a transformative Third World Approaches to International Law (TWAIL) framework to tackle illegitimate debt in Africa, critiquing the current debt architecture for its neglect of African socio-political realities. It argues for a reformed debt system that prioritizes African agency, allowing debtor nations to pursue debt restructuring under fair, participatory terms. Through integrating human rights and innovative tools like debt audits and arbitration, the framework proposes robust legal mechanisms to dismantle predatory lending practices and odious debt structures. Ultimately, this article envisions a debt regime that centers African interests, promoting genuine sovereignty and sustainable development.

The Nature Conservancy, the world’s largest environmental NGO, has launched an audacious plan to negotiate debt-for-ocean swaps in Southern coastal and small island states, linked to the international pledge of 30 × 30. Representing an evolution from the debt-for-nature swaps popularized in the 1990s, these new variants are regularly praised as ingenious solutions to the debt and biodiversity crisis. Gabon is the latest country to have concluded a swap, bringing the total value of debt exchanged to over US$2.5 billion. However, there are several concerns about these opaque transactions from the perspective of debt justice and the democratic and equitable governance of marine resources. Debt-for-ocean swaps illustrate the pace at which financialization has transformed international approaches to conservation and the risks that this brings.

This paper delves into the complexities of sovereign debt restructuring in the 21st century, including the rising debt burdens of developing countries, the growing influence of private creditors and new official creditors, and novel economic pressures generated by climate change. It argues for a multi-faceted approach to promote sustainable debt management that goes beyond existing mechanisms. It proposes the establishment of a permanent institution to negotiate debt restructuring together with specific mechanisms to manage the current debt crisis. The latter could be based on revisions to the Common Framework for Debt Treatment or an alternative instrument. Additionally, it emphasizes the importance of strengthening debt transparency through a global debt registry and improved reporting standards. It also explores the role of responsible lending and borrowing practices, the regulation of credit rating agencies, and early warning systems to enable proactive risk management. It also examines innovative debt instruments such as debt-for-nature swaps, sustainable bonds, and state-contingent bonds, highlighting their potential to address specific challenges. Ultimately, the paper underscores the need for a collaborative effort among all stakeholders – international financial institutions, national governments, and private creditors – to build a more resilient and sustainable international debt architecture.

This article studies human rights due diligence by private corporate creditors in the context of sovereign debt restructurings. First, the legal bases of this specific due diligence are presented and systematized. Then, by providing empirical statistical evidence, the article analyses whether haircuts applied by creditors across countries regularly consider the social and economic human rights situation of the debtor countries in question, as part of creditors’ due diligence. Also, the main characteristics of bond markets that contribute to understanding the asymmetric power relationship between private lenders and sovereign borrowers are described. Finally, Argentina’s latest debt restructurings are studied in depth to determine whether human rights were taken into account when agreeing on the size of haircuts. From quantitative and qualitative data, this article concludes that the haircuts agreed by creditors are regularly not sensitive to the social and economic human rights situation of debtor populations or to the impact that debt agreements could have on them.

The establishment of a sovereign debt restructuring mechanism (SDRM) is one of the important issues in the academic debate on a viable constitution for the European Monetary Union (EMU). Yet the topic seems to be taboo in official reform contributions to the debate. Against this backdrop, the article identifies the SDRM interests of key players, including the European Commission, the European Parliament, the European Central Bank and national governments. The empirical section takes advantage of the recently established EMU Positions Database. The findings confirm political economy expectations: Low-debt countries support an EMU constitution that includes an insolvency procedure whereas a coalition of high-debt countries and European institutions oppose it. The analysis points towards a possible political-economic equilibrium for coping with sovereign insolvencies: an institutional set-up without an SDRM and with hidden transfers. Recent European fiscal innovations in response to the Covid-19 solvency shock confirm this prediction.

Argentina’s 2001 default was followed by a complex debt restructuring that included a long legal dispute with so-called vulture funds and other holdout creditors. The resolution of the sovereign default took almost 15 years—and the case continues to have ramifications that are resulting in new disputes. This paper examines the whole restructuring process. It describes the strategies followed by the debtor and the bondholders, their implications, and the characteristics of the legal disputes. It also analyzes the implications of the default resolution for the functioning of sovereign lending markets.

The impact of the 2018 Barbados domestic debt exchange on creditors is explored by estimating the losses suffered as a result of the operation. The exchange featured ten new instruments, with varying terms and non-standard complex structuring, allocated according to the creditor type and claims held. Net present value (NPV) analysis is used to calculate the implied haircut associated with each of the new instruments, the losses suffered by the creditor category, and the impact of the terms of the original debt on creditors' losses. Major concessions were wrangled from the National Insurance Scheme, the Central Bank, and The University of the West Indies, which suffered a nominal haircut of 65%-70% on their holdings, accounting for the 26% decline in domestic debt and NPV losses between 41% and 70%. The nominal value of private sector creditors' claims was unaffected, and most incurred NPV losses of 30%-32%. Only the very long-dated instrument allocated to Sagicor Financial Corporation shows a positive NPV. L'impact de l'échange de la dette intérieure de la Barbade de 2018 sur les créanciers est exploré en estimant les pertes subies à la suite de l'opération. L'échange comportait dix nouveaux instruments, avec des conditions variables et une structuration complexe non standard, répartis en fonction du type de créancier et des créances détenues. L'analyse de la valeur actuelle nette (VAN) permet de calculer la décote implicite associée à chacun des nouveaux instruments, les pertes subies par la catégorie de créanciers et l'impact des conditions de la dette initiale sur les pertes des créanciers. D'importantes concessions ont été arrachées au National Insurance Scheme (régime d'assurance nationale), à la Banque centrale et à l'University of the West Indies, qui ont subi une décote nominale de 65% à 70% de leurs avoirs, ce qui explique la baisse de 26% de la dette intérieure et les pertes de valeur actualisée nette comprises entre 41% et 70%. La valeur nominale des créances des créanciers du secteur privé n'a pas été affectée, et la plupart d'entre eux ont subi des pertes de VAN de 30 à 32%. Seul l'instrument à très longue échéance alloué à Sagicor Financial Corporation présente une VAN positive. Se explora el impacto del intercambio de la deuda interna de Barbados de 2018 en los acreedores, estimándose las pérdidas sufridas como resultado de la operación. El intercambio presentó diez nuevos instrumentos, con términos variables y estructuración compleja no estándar, asignados de acuerdo con el tipo de acreedor y los reclamos hechos. El análisis del valor actual neto (VAN) se utiliza para calcular el recorte implícito asociado con cada uno de los nuevos instrumentos, las pérdidas sufridas por la categoría de acreedores y el impacto de los términos de la deuda original en las pérdidas de los acreedores. Se obtuvieron importantes concesiones del Plan Nacional de Seguros, el Banco Central y la Universidad de West Indies, que sufrieron un recorte nominal del 65% al 70% en sus tenencias, lo que representa una disminución del 26% de la deuda interna y pérdidas entre 41% y 70% del VAN. El valor nominal de las reclamaciones de los acreedores del sector privado no se vio afectado, y la mayoría incurrió en pérdidas de 30%-32% en el valor actual neto. Solo el instrumento a muy largo plazo asignado a Sagicor Financial Corporation muestra un VAN positivo.

Kamu borçlanmasını etkileyen faktörler dikkate alındığında bunlar, kamu borç oranı ve borç dinamikleridir. Bu çalışma, Türkiye ekonomisinde borç dinamiklerini belirleyen temel makroekonomik değişkenleri incelemeyi amaçlamaktadır. 2009Q1–2024Q4 dönemi çeyreklik verileri kullanılarak ARDL eşbütünleşme yaklaşımı ve hata düzeltme modeli (ECM) çerçevesinde, borç stoku/GSYH oranının uzun dönemli belirleyicileri olarak enflasyon, faiz dışı denge, faiz oranı – büyüme farkı (r–g), kriz dönemleri ve borç stokundaki değişim analiz edilmektedir. Sonuç olarak, uzun dönemde borç stokunun enflasyon, faiz dışı denge, faiz oranı – büyüme farkı, kriz dönemleri ve borç artışı gibi değişkenlerden etkilendiği tespit edilmiştir. Özellikle r-g farkı ve kriz dönemleri borç yükünü artırıcı en güçlü faktörler olarak öne çıkarken; enflasyon ve faiz dışı denge borç stokunu azaltıcı yönde katkı sağlamaktadır. Borcun sürdürülebilirliği için faiz oranın büyüme oranından yüksek olduğu koşulda hükümetlerin yeteri düzeyde faiz dışı fazla verilmesi gerektiğine dikkat çekilmiştir. Bu sonuçlar, borç dinamiği açısından faiz–büyüme farkının kontrol altında tutulması gerekliliğini ve faiz dışı dengenin kritik rolünü teyit etmektedir.

Following its 2022 default, Sri Lanka achieved a landmark debt restructuring in 2024, exchanging USD 12.55 billion in bonds with 98% creditor participation. This paper examines the groundbreaking contractual innovations that enabled this success. The restructuring introduced two pioneering State Contingent Debt Instruments (SCDI): Macro-Linked Bonds tied to GDP performance, and Governance-Linked Bonds (GLBs). Unlike traditional instruments, these embed contingency mechanisms directly within bond structures, allowing upside and downside adjustments based on economic and governance performance. A key innovation lies in GLBs’ comprehensive information disclosure covenants, mandating regular debt reports, economic reviews, and investor calls. These transparency requirements create enforceable governance mechanisms while aligning incentives between issuer and bondholders – successful achievement of targets reduces borrowing costs and improves secondary market valuations. Sri Lanka’s approach addresses longstanding transparency and governance challenges in sovereign debt markets while providing a replicable framework for future restructurings. The exchange’s success, demonstrates how innovative contractual design can restore debt sustainability while promoting governance improvements.