Discover and read the best of Twitter Threads about #DSSI
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An update to the work with @davidmihalyi & @valentin_lang on the effect of the #DSSI on sovereign bond spreads in poor countries. In a nutshell, spreads declined, consistent with the liquidity provision from the suspension of debt service #ResolvingSovereignDebt
A thread 1/8
A thread 1/8
The Debt Service Suspension Initiative (DSSI) provides debt relief to poor countries by deferring debt service due in 2020 without affecting the NPV of public debt. Liquidity provision under the DSSI accounts for about 20% of the fiscal shortfall due to the Covid-19 shock. 2/8
The DSSI is good for both creditors & debtors, but not all countries have joined. Why? A key motivation behind the reluctance to join are reputational concerns: participation may signal debt sustainability problems and trigger an increase in sovereign bond spreads 3/8
