Assessment of Debt Restructuring Operations in Commonwealth Small States

image of Assessment of Debt Restructuring Operations in Commonwealth Small States

An increase in external shocks, international terrorism and natural disasters over the past two decades has led to unsustainable debt burdens in small and vulnerable states, resulting in debt restructuring programmes.

This paper highlights the concerns of Commonwealth small states about their growing debt burden and the emerging challenges to their overall debt sustainability. It pinpoints the factors that lead to debt, the hurdles involved with debt restructuring and the weaknesses involved in debt management. It offers key lessons learned based on the experiences of seven small Commonwealth countries that have restructured their debts: Antigua and Barbuda, Belize, Dominica, Grenada, Jamaica, St Kitts and Nevis, and Seychelles.



Lessons Learned From Debt Restructuring Experiences

The debt of the Commonwealth’s small states remains a pressing problem. While the implementation of the HIPC Initiative and the MDRI has led to reductions in the debt levels of Guyana – a low-income CSS – chronically high, unsustainable debt levels have persisted among its middle-income counterparts, particularly those in the Caribbean. Debt levels among the Commonwealth-7 averaged over 90 per cent of GDP for the period 2000–13, and in the aftermath of the global financial crisis, from 2009–13, averaged well over 100 per cent of GDP. At the end of 2013, four Caribbean countries ranked among the top ten most heavily indebted countries in the world (Caribbean Development Bank 2013).


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