Why is debt restructuring for countries also in the best interest of global creditors?
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It is better to negotiate to get a little repayment than to demand something that one could never enforce. There is not much a modern creditor can do to “force” a government to pay if the government doesn’t want to. (No longer have the British East India company)
There is also a point that just because there is a crisis today, big creditors don’t necessarily want to cut all future ties with a government. If someone forces another to starve and kick them when they’re down, it is very likely they’re never going to be welcomed back. Governments can change but the people have memories too.
An orderly process is nearly always preferable to chaos. Remember that creditors are not monolithic – if a particular creditor becomes particularly nasty, they’ll simply be excluded from negotiations. If a country owes 10 people, and one of them is the noisiest and nastiest, the other 9 creditors will just exclude that person and negotiate with the country without them. It pays to cooperate.
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