{
  "title": "Sovereign Debt Restructurings in Grenada: Causes, Processes, Outcomes, and Lessons Learned",
  "publication": "IMF Working Papers, July 24, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/07/24/sovereign-debt-restructurings-in-grenada-causes-processes-outcomes-and-lessons-learned-45101",
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  "summary": "This paper documents the two debt restructurings that Grenada undertook in 2004–06 and 2013–15.Both restructurings emerged as a consequence of weak fiscal and debt situations, whichbecame unsustainable soon after external shocks hit the island economy.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Documents two debt restructurings that Grenada undertook in 2004–06 and 2013–15.\n- Both restructurings emerged as a consequence of weak fiscal and debt situations, which became unsustainable soon after external shocks hit the island economy.\n- Both restructurings provided liquidity relief; the second restructuring involved a principal haircut.\n- The first restructuring was not able to secure long-term debt sustainability.\n- Highlights the importance of: (1) establishing appropriate debt restructuring objectives; (2) committing to policy reforms and maintaining ownership of the restructuring goals; and (3) engaging closely and having clear communications with creditors."
    },
    {
      "heading": "Major findings",
      "content": "- Two restructurings: 2004–06 and 2013–15.\n- Liquidity relief achieved in both restructurings.\n- Principal haircut implemented in the 2013–15 restructuring.\n- The 2004–06 restructuring did not secure long-term debt sustainability.\n- Causes: weak fiscal and debt situations that became unsustainable after external shocks."
    },
    {
      "heading": "Restructuring processes (as described)",
      "content": "- Restructurings arose as responses to unsustainable fiscal and debt positions following external shocks.\n- Instruments and actions included bond restructuring and bond exchange mechanisms (keywords in source: bond contract, bond exchange, bond restructuring, exchange offer, US$ bond, US$-denominated bond).\n- Involvement of private sector creditors and use of bond-related legal and contractual elements (keywords in source: Disaster Clause, grace period, interest rate, foreign currency)."
    },
    {
      "heading": "Outcomes and implications",
      "content": "- Short-term liquidity relief was achieved in both episodes.\n- Only the second episode (2013–15) included a principal haircut, implying deeper debt reduction.\n- The limited success of the 2004–06 restructuring in securing long-term sustainability underscores the need for complementary policy measures and stronger commitment to reforms."
    },
    {
      "heading": "Lessons learned and policy recommendations",
      "content": "- Establish clear and appropriate debt restructuring objectives at the outset.\n- Commit to policy reforms and maintain ownership of restructuring goals to improve prospects for sustainable outcomes.\n- Engage closely with creditors and ensure clear communications throughout the restructuring process.\n\n---\n\n Content in this bundle\n\n- Wp17171\n  - Wp17171 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Wp17171 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/07/24/sovereign-debt-restructurings-in-grenada-causes-processes-outcomes-and-lessons-learned-45101"
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    "Authors: Tamon Asonuma, Xin Li, Michael G. Papaioannou, Saji Thomas, Eriko Togo",
    "Published: July 24, 2017",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484311035.001",
    "Documents two debt restructurings that Grenada undertook in 2004–06 and 2013–15.",
    "Both restructurings emerged as a consequence of weak fiscal and debt situations, which became unsustainable soon after external shocks hit the island economy.",
    "Both restructurings provided liquidity relief; the second restructuring involved a principal haircut.",
    "The first restructuring was not able to secure long-term debt sustainability.",
    "Highlights the importance of: (1) establishing appropriate debt restructuring objectives; (2) committing to policy reforms and maintaining ownership of the restructuring goals; and (3) engaging closely and having clear communications with creditors.",
    "Two restructurings: 2004–06 and 2013–15.",
    "Liquidity relief achieved in both restructurings.",
    "Principal haircut implemented in the 2013–15 restructuring.",
    "The 2004–06 restructuring did not secure long-term debt sustainability.",
    "Causes: weak fiscal and debt situations that became unsustainable after external shocks.",
    "Restructurings arose as responses to unsustainable fiscal and debt positions following external shocks.",
    "Instruments and actions included bond restructuring and bond exchange mechanisms (keywords in source: bond contract, bond exchange, bond restructuring, exchange offer, US$ bond, US$-denominated bond).",
    "Involvement of private sector creditors and use of bond-related legal and contractual elements (keywords in source: Disaster Clause, grace period, interest rate, foreign currency).",
    "Short-term liquidity relief was achieved in both episodes.",
    "Only the second episode (2013–15) included a principal haircut, implying deeper debt reduction.",
    "The limited success of the 2004–06 restructuring in securing long-term sustainability underscores the need for complementary policy measures and stronger commitment to reforms.",
    "Establish clear and appropriate debt restructuring objectives at the outset.",
    "Commit to policy reforms and maintain ownership of restructuring goals to improve prospects for sustainable outcomes.",
    "Engage closely with creditors and ensure clear communications throughout the restructuring process.",
    "**Wp17171**"
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