The 2021 IIF Global Debt and Financial Stability Roundtable, generously sponsored by Fitch Ratings, was held online on Friday, April 9. This event brought together senior public officials from both mature and emerging market economies, leaders from the private financial sector, and senior representatives from international financial institutions and academics.
High-level discussions in an online format focused on recent developments in global sovereign debt markets and risks to financial stability. We will also discussed growing risks for debt sustainability and the ongoing policy response including the G20 Common Framework for Debt Treatments Beyond the DSSI. Two interactive sessions featured expert speakers and offered participants the opportunity to ask questions and share comments on:
Global Debt and Pandemic Recovery
As governments borrowed heavily to fund pandemic response, global debt rose by nearly 10% in 2020, to a record high of over $280 trillion. While vital, the unprecedented scale and duration of fiscal and monetary policy support poses difficult challenges including the nature and timing of exit strategies, potential political and social pressure to keep support measures in place, and risks for financial stability. With low or negative growth-adjusted interest rates in many parts of the world, how much do elevated global debt levels matter? What is the risk of another “taper tantrum”—and what could be the consequences for emerging markets this time around?
Seeking a Collaborative Approach to Sovereign Debt Resolution
Highly indebted governments in low-income developing countries have been particularly hard hit by the costs of pandemic response. The G20 has sought to ease these strains through the Debt Service Suspension Initiative (DSSI) and to facilitate any necessary debt restructuring through the Common Framework for Debt Treatments Beyond the DSSI, which brings together G20 official bilateral creditors and calls for debtor countries to seek treatment from private-sector creditors “at least as favorable” as that agreed with official bilateral creditors. How can a highly diverse group of creditors—including Paris Club and non-Paris Club bilateral creditors, multilateral creditors, private sector bondholders and banks—work together to ensure transparency, fair burden-sharing and the best possible outcomes for borrowing countries?
This was an invitation-only event.