Shock Absorbers in Debt Contracts for Poor Countries: Preventing Stress from Turning into Default

Poor countries, already weighed down by high debt service burdens, are now grappling with yet another major external shock: the Iran war. We've seen the long-term damage that such shocks can do. Countries that could otherwise avoid debt restructuring need tools to help them weather severe liquidity and fiscal squeezes. How can we help them avoid default? How can we build shock absorbers that promote resilience against a broad array of shocks, not just those that are climate-related?

Join us for this in-person and live streamed event to hear a keynote address from Carmen Reinhart to discuss a new CGD proposal for temporary debt- service suspension clauses that focus on the magnitude, not the source, of the shock.