Legal framework for sovereign debt restructuring processes: a first step

25 February 2015

​Member States, international organizations and financial institutions recently took part in the first working session of the United Nations Ad Hoc Committee on sovereign debt restructuring processes, organized by UNCTAD in New York.

UNCTAD, as the Secretariat of the United Nations Ad Hoc Committee on sovereign debt restructuring processes, organized the first working session at UN headquarters in New York on 3-5 February 2015.

The meeting was an informative session meant to ignite the discussions among Member States and relevant stakeholders on the type of legal framework most likely to gain the consensus of the international community. It comprised five panels that discussed: the gaps in the current restructuring system; the international resolution of economic disputes; the options for moving forward; the political economy of debt restructuring; and the economic perspectives related to standstills, rollovers and write offs.

At its opening plenary, Member States elected the Bureau of the Ad hoc Committee, comprised of H.E. Mr. Sacha Sergio Llorentty Solíz, (the Plurinational State of Bolivia) as the Chair of the Ad hoc Committee, Mr. Niluka Prabhath Kadurugamuwa (Sri Lanka) as Vice-Chair, and Mr. Khaleb Benamadi (Algeria) as Rapporteur.

In a keynote address by J.A Ocampo, professor of Public affairs at Columbia University , the audience was reminded of the prevailing approaches to sovereign debt restructuring processes,. Member States from the Group of G77 and China, the Union of South American Nations (UNASUR), the Alliance of Small Island States (AOSIS) then issued statements. Representatives of the civil society also delivered statements and participated actively in the work of the five panels.

The statements revealed diverging positions with regards to the best forum to hold the debates on this issue; the debt to be covered by a debt restructuring mechanism and the approach to be adopted (legal basis, procedural elements, and institutional options). Nevertheless, a consensus emerged for the need to include all stakeholders in a comprehensive debate on this issue.

While no official conclusions were drawn from the session, the Chair of the Committee indicated that consultations with stakeholders would be organized in the aftermath of the first session of the Ad Hoc Committee.

As the Secretariat of the Ad Hoc Committee, UNCTAD will organize a meeting with Initiative for Policy Dialogue at Columbia University at the end of March 2015 to provide further assistance to the Bureau's elaboration of a paper describing the different options available for creating a multilateral framework on sovereign debt restructuring processes.

UNCTAD will take this opportunity to discuss the Debt Workout Roadmap document, which will be released contemporaneously.