The State and Debt Management Strategies

Abstract

Indebted development is conceptualized in this book as a wide-ranging series of attempts by debtor states to create, implement, and sustain economic adjustment and debt management strategies. The question should not be whether such states have sufficient political will to make hard adjustment decisions; rather, the question is, given that adjustment is unavoidable, how can we explain the selection and implementation of two complementary adjustment strategies: one that targets domestic economic reforms or the other that is oriented toward external debt management? The previous chapter examined the first side of the question; that is, state economic objectives and policies that impinge on domestic interests. This chapter will analyze the second side of the question; that is, the state’s debt management policies as they impact upon international creditors. As noted in Chapter One, the state, caught in the center of often countervailing pressures, becomes empowered to respond to these pressures and demands. Through a mixture of economic orthodoxy and heterodoxy, the state uses its power in an attempt to shape the adjustment process. Towards international creditors, states choose between a) cooperating with creditors — by meeting debt obligations often through the imposition of austerity measures — and b) defecting — by selecting debt repudiation or interest non-repayment in order to pursue domestic economic growth. Of course, as demonstrated in the previous chapter on the state’s negotiating strategies toward economic adjustment, these two strategic options reflect ideal-types. State bargaining stances on debt management often involve considerable slippage.KeywordsCommercial BankTrade CreditInterest PaymentExternal DebtPrivate CreditorThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.