Download Sovereign debt crisis 2010

IMF mission in Ukraine:
problems and prospects
Shyposha Katerina
Sovereign debt crisis is not a
new phenomonon:

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Russia → sovereign debt default;
Argentina – fails to pay off its debts;
Investment bank Lehman Brothers - bankrupt
→ a huge impact on the world banking
system
sovereign debt crisis 2010
How the sovereign debt crisis
emerges:

In theory
public welfare schemes
The borrowed capital
major infrastructural
projects
In practice
The debt is payable in a currency other than
the debtor’s currency →the sovereign debt
crisis can emerge.

Greece, Ireland, Spain, and Portugal
rising governmental debt levels
humongous government
deficits
European fiscal crisis
European countries
(Spain, Greece etc)
bond yield spreads
risk insurance on
credit default swaps
long term fiscal consolidation measures
NEEDED
Current data:

sovereign debt:2008 - 62 % of world GDP;
2009 – 85 % of world GDP.

average fiscal deficit has also increased
sharply by no less than 1%.
Factors of influence:





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social safety nets;
unprecedented banking crisis;
severe decline in output;
falling tax receipts;
fiscal stimulus measures;
bank rescues;
increased government spending.
Measurers to be assumed:



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reform process needs to be stepped up;
growth must be provided right impetus;
deficits must be reined;
liquidity needs to be maintained;
investor confidence must be restored.