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Market-friendly alternative to domestic debt restructuring
Brookings
2025.11.11
A large and growing share of domestic-law public debt within the sovereign liabilities of many low- and middle-income countries in recent years has attracted much-needed attention to the topic. Starting from Reinhart and Rogoff (2008), who brought issues related to the scale and scope of domestic debt1 to the forefront of economics profession, Erce, Mallucci, and Picarelli (2022) demonstrated that domestic debt defaults and restructurings have been a rather common phenomenon in recent decades, while IMF (2021) and Grigorian (2023) highlighted the range of design and implementation issues needed to be explicitly factored in for a restructuring of domestic debts to succeed and provided a framework for measuring fiscal savings generated by domestic debt restructurings (DDRs).