Editors: Martin Guzman, Jose Antonio Ocampo, and Joseph E. Stiglitz
Publisher: Columbia University Press – 284 pages
Book Review by: Dev Daulat
Have you ever wondered what is the combined debt of all the countries of the world? A recent article in Wikipedia detailing the debts of 189 countries shows that the total external debt is about US$76 trillion.
What is external debt? It is the debt owed by any single country to other countries. The external debt consists of two components: public debt and private debt. Public debt is the total money owed by the national government, the state or provincial governments, and the city or town governments to the lenders or creditors. Private debt is the total money owed by individuals, households, families and companies to lenders or creditors
Do take note however that what matters to each country is not the total debt it owes to other countries, but the total net external debt or credit, which is debt it owes to other countries, minus what is owed to it by other countries. Some countries are net international creditors, which means their external debt is less than what other countries owe it. Only four countries belong to this enviable group, and they are: Hong Kong, Japan, Norway, and Switzerland.
By another measure called the net international investment position per capita (NIIP), which is net external assets, not net external liabilities per person, Singapore tops the list, with $152,935 per person, followed by Norway at $134,631, Hong Kong at $133,671, Switzerland at $73,005, and Taiwan at $44,862.
In terms of total net international inter international investment position, Japan tops the list with $2.812 trillion, followed by Germany with $1.615 trillion, China with $1.596 trillion, Taiwan with $1.05 trillion, and Hong Kong with $979 billion. The top five debtor nations by this measure (owing money) are: the United States with $7.269 trillion, Spain with $$1.091 trillion, Brazil with $$731 billion, Australia with $699 billion, and the United Kingdom at $690 billion.
Of the $76.427 trillion ($76 trillion and $427 billion) global debt, over $65 trillion or nearly 86 percent of the total, is owed by the top 17 debtor nations, each of which owes at least $1 trillion. The top five debtors are the United States with $19.188 trillion debt as of May 5, 2016 (a more updated figure is $19.346 trillion as of July 11, 2016 – click on this link for debt and other useful information: http://www.usdebtclock.org).
The other four top debtor countries (as of March 31, 2014 – you could check for more updated data online if you wish) are: the United Kingdom, with $9.591 trillion debt, France owing $5.750 trillion, Germany with debt of $5.546 trillion, and Luxembourg owing $3.472 trillion.
Most of the external debt figures of countries (181 of the 189 countries) are after 2012, or relatively current. Just a few – eight – countries’ debt amounts were not relatively current.
The problem of sovereign debt (debt of a nation) has become a very difficult one in recent years to resolve satisfactorily. The solutions agreed upon by debtor nations with lender nations have taken many years of effort to come to a conclusion with signatures by both parties, and still question marks remain in the minds of the lenders whether the debtors will repay on time.
As the title of this book indicates, sovereign debt restructurings are typically too late, and accomplish too little, after much damage has already been done to a country’s economy. What can be done so that debt repayment schedules are worked out well, and that the parties involved know for sure that they will in fact become realities?
Twenty-one people from varied backgrounds and orientations tackle this and related issues in this all-important book that may hold the key to a less stressful future for the people of debtor and creditor nations. The ideas proposed in it, if implemented, could mean lower unemployment, less irresponsible spending by governments, and reduced economic and political instability.
The contributors of materials for this book (including the three editors named above) are from six countries – Argentina, Canada, Colombia, Germany, Greece, and the United States. They authored the 15 chapters of this book, which we name below to give you an idea of the issues discussed in it:
- Part I. General Issues of Foreign Debt Structuring
- Creating a Framework for Sovereign Debt
- Sovereign Debt of Developing Countries: an Overview
- Private Creditor Power and the Politics of Sovereign Debt Governance
- Part II. Two Case Studies: Argentina and Greece
- From the Pari Passu Discussion to the “Illegality” of Making Payments: The Case of Argentina
- Greek Debt Denial: A Modest Debt Restructuring and Why It Was Ignored
- Part III. Improvements to the Contractual Approach
- Count the Limbs: Designing Robust Aggregation
- Contractual and Voluntary Approaches to Sovereign Debt Structuring: There is Still More to Do
- Sovereign Debt Structuring: A Coasean Perspective
- Creditor Committees in Sovereign Debt Restructurings: Understanding the Benefits and Addressing Concerns
- Part IV. Proposals for a Multinational Framework for Sovereign Debt Restructuring: Principles, Elements, and Institutionalization
- A Brief History of Sovereign Debt Resolution and a Proposal for a Multilateral Instrument
- Toward a Multilateral Framework for Recovery from Sovereign Insolvency
- Making a Legal Framework for Sovereign Debt Restructuring Operational: The Case for a Sovereign Debt Workout Institution
- Perspectives for a Sovereign Debt Restructuring Framework: Less is More
- Toward a Framework for Sovereign Debt Restructuring: What Can Public International Law Contribute?
- Debts, Human Rights, and the Rule of Law: Advocating a Fair and Efficient Sovereign Insolvency Model
Most of the chapters in this volume were presented at a conference, Frameworks for Sovereign Debts Restructuring, on November 17, 2014 held at and jointly organized by Columbia University’s Initiative for Policy Dialog (IPD), the Center for International Governance Innovation (CIGI), the Center for Global Economic Governance (CGEG) and the United Nations Department of Economics and Social Affairs (UNDESA) in New York City.
In this book, various ideas are presented by writers interested in, or involved in one way or another in sovereign debt restructuring. Recent history has shown us however, due to different reasons, many failures in this area, which have also become quite frequent. What can and should be done to achieve success? In this book new ideas are assessed based on their relative merits and demerits. It is an insightful one, full of good ideas, and well worth reading to get different perspectives
Editors:
Martin Guzman is a postdoctoral research fellow at Columbia University and an associate professor at the University of Buenos Aires. He is a co-chair of the Columbia IPD Taskforce on Debt Restructuring and Sovereign Bankruptcy and a senior fellow at the Center for International Governance Innovation.
Jose Antonio Ocampo is a professor at Columbia University and chair of the United Nations Economic and Social Council’s Committee for Development Policy.
Joseph E. Stiglitz is University Professor at Columbia University. A recipient of the Nobel Memorial Prize in Economic Sciences (2001), he is also the Chief Economist of the Roosevelt Institute and co-chair of the High Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD.
