This doesn't work for many reasons, including that the market now knows the gov might attempt a buyback. To the extent that the market is forward-looking, Leb won't gain from buybacks. Also:

1) The market would see the purchases as a +ve signal and the price of bonds would rise.
2) Use of scarce funds to buy back and retire some of the debt will increase the price of the remaining debt and make a future restructuring more expensive.

3) Experience of debt restructurings in last 20 years teaches that what works are exchange offers, not buybacks.
4) The analysis remains the same if the country finances the debt buyback with new senior debt instead of cash.

5) For a buyback to make sense for a country, it must either receive grants to cover part of the cost, or else receive some other substantial negotiating concessions.
6)The Bolivian experience of 1988 illustrates the pitfalls of debt buybacks and the failure of such a strategy.

7) The comprehensive debt restructuring plan advocated by some economists continues to be preferable than any "muddling through" approach.

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