How to limit future emerging market debt crises

The International Monetary Fund said on Nov. 19 that state-contingent debt instruments, such as warrants linked to economic growth, should be more widely used in sovereign debt restructurings, and offered in a more standardized format. Such instruments would offer holders higher payouts when economic conditions improved.

The Washington-based international lender said these instruments had not been used frequently partly because their bespoke designs and illiquidity meant investors tended to discount their value heavily. The IMF said these instruments could be made more attractive by standardizing terms and linking payouts to variables over which the government had less control, such as commodity prices.

The Group of 20 major developed and emerging nations on Nov. 13 agreed on a common approach to restructuring government debt that provides guidelines for how to reduce or otherwise alter the terms of unsustainable debt.

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Emerging-Market Borrowing Boom Sparks Concerns Over Debt LoadsDeveloping economies borrowed at a blistering pace at the start of the year after a record 2020, prompting investors to question whether they are building up debt problems for the future. This debt bomb is a MOAB, the mother off all bombs. How is WSB any different than when Boomer jimcramer goes on MadMoneyOnCNBC giving out stock advice to prescreened callers Isn’t this also pumping stock? Where is his DD WSB DD is free for all to use.
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