An African Perspective on Reforming Sovereign Debt Restructuring of Privately Held Debt

Abstract

In the past decades, financial crises have recast the spotlight on sovereign debt restructuring (SoDR). Despite decades of discussion on how to reform SoDR, it still raises complex legal tensions. Among these tensions is the current lack of a mechanism to administer SoDR and the fact that the current SoDR regime is fragmented and leads to suboptimal and unfair results. This thesis critically assesses these tensions, with a focus on the international reform of the restructuring of privately held sovereign bonds. In making its contribution to the discourse on SoDR, this study seeks to bridge the gap between the legal and policy debates on SoDR. The novelty of the approach in this study is that it aims to add an African perspective to the international literature on the procedural, normative and conceptual reform of SoDR. Towards this end, the question of how to reform the SoDR landscape is addressed within the framework of a developmental and a human rights approach. This paradigm through which SoDR should also be viewed has only begun to feature in the literature recently and thus requires further evaluation. This study assesses the historical evolution of SoDR, the current challenges in the contemporary era of SoDR and evaluates the corresponding proposals for reform. While acknowledging the role that the contractual approach (the primary mechanism for SoDR) has already played in the current landscape, this study argues that this approach alone is not sufficient to ensure fair, transparent and prompt restructuring. The study consequently assesses the policy debate on viable options for reform.