Considerations in the Choice of the Appropriate Discount Rate for Evaluating Sovereign Debt Restructurings

Author/Editor:

Julie A Kozack

Publication Date:

December 1, 2005

Electronic Access:

Free Full Text (PDF file size is 455 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Policy Dicussion Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Assessments regarding the effectiveness of sovereign debt restructurings are often summarized by comparisons of the net present value of debt service before and after the restructuring. These calculations are inherently sensitive to the choice of discount rate. This paper explores issues that arise in selecting discount rates when evaluating sovereign debt restructurings. It suggests using a range of discount rates and centering the analysis around the internal rate of return to assess whether the debt restructuring has generated net present value savings or costs to the debtor.

Series:

Policy Discussion Paper No. 05/09

Subject:

English

Publication Date:

December 1, 2005

ISBN/ISSN:

9781451975840/1934-7456

Stock No:

PPIEA2005009

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

29

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