Assessing sovereign debt under uncertainty

  title={Assessing sovereign debt under uncertainty},
  author={Gianluigi Ferrucci and Adrian Penalver},
Generally speaking, though, creditors are less willing to roll over loans when there is an expectation that the debtor will be unable to repay in the future. This expectation can arise because of the types of policies the government is running. For example, a government weakening its tax base is less likely to be able to secure funds to make future repayments. Or a country using foreign exchange reserves to defend a fixed exchange rate may be using up resources otherwise available to repay… CONTINUE READING