LSE - Small Logo
LSE - Small Logo

Dipa Patel

October 10th, 2023

Professor Ken Shadlen on Restructuring Sovereign Debt

0 comments

Estimated reading time: 4 minutes

Dipa Patel

October 10th, 2023

Professor Ken Shadlen on Restructuring Sovereign Debt

0 comments

Estimated reading time: 4 minutes

As fear of widespread debt crises is growing in importance and receiving more attention, we take the opportunity to share an interview on the topic with Prof Ken Shadlen on “Restructuring Sovereign Debt”. Read the interview here.

More than 60 low-income or middle-income countries are in or at risk of falling into “debt distress,” by which we can think of in simple terms as meaning that the countries owe more money to external creditors than they have abilities to pay.

For countries in debt distress what’s needed is “debt restructuring,” which consists of identifying countries’ actual payment capabilities (how much can they realistically be expected to pay and still keep the lights on?), and reaching agreement with the various creditors who are expecting repayment to reduce the amount of external debt to this level (how to distribute the losses of reduced repayment). Both aspects of debt restructuring (determining the level of “sustainable debt” and working out the terms of debt relief to achieve “sustainability”) are complicated, technically and politically. The creditors that need to be involved in restructuring include other countries (“bilateral” creditors), international organizations such as the International Monetary Fund, World Bank, and regional development banks (“multilateral creditors”), and private investors that lent countries money (“private” or “commercial” creditors).

In the last 20 years among the factors making debt restructuring even more complicated is that these creditors have grown and diversified, i.e. there are more bilateral creditors that expect to be repaid, there are more multilateral lenders involved, and private creditors have begun to lend more money to a wider array of countries.

As fear of widespread debt crises is growing in importance and receiving more attention, we are taking the opportunity to share an interview on the topic with Professor Ken Shadlen, “Restructuring Sovereign Debt”. The discussion here is largely about restructuring of debt to the third type of creditors, for-profit, private investors who have purchased bonds issued by countries.

The interview (from 2021), was conducted by a former ID MSc student who had taken Prof Shadlen’s course, “International Institutions and Late Development” (DV424), where these issues are examined in detail.


The views expressed in this post are those of the author and in no way reflect those of the International Development LSE blog or the London School of Economics and Political Science. 

Image credit: Ruth Enyedi via Unsplash.

About the author

Dipa Patel

Posted In: Development Economics | Political Economy of Development

Leave a Reply

Your email address will not be published. Required fields are marked *

RSS Justice and Security Research Programme

RSS LSE’s engagement with South Asia

  • Bangladesh: Turmoil and Transition in a Fragile Democracy
    As Bangladesh emerges as a growing economy, its political challenges are getting more complicated. The recent victory of the Awami League comes, once again, at the cost of wider electoral participation. Shafi Md Mostofa discusses the fragile trajectories of her democratic profile, and the increasing prominence of Islamist politics in the country.          The […]
  • Political Economy of Forest Rights in India
    The implementation of forest rights in India has been a complex, and occasionally successful, enterprise. In this post, Tejendra Pratap Gautam examines details of one such successful exercise where community enterprise meets state policy to make it work for communal good, underlining the importance of a ‘political economy’ intervention in development at the grassroots level.  […]