Gallagher Quoted in The New York Times on Debt Restructuring
Kevin Gallagher, Professor of Global Development and Director of the Global Development Policy Center at Boston University’s Frederick S. Pardee School of Global Studies, was quoted in The New York Times on restructuring debt repayment plans for the Global South.
In the article, titled “How to Avoid Another Global Debt Crisis,” Gallagher comments on debt relief and debt restructuring plans to stave off an impending debt disaster. Overly generous lending practices combined with the COVID-19 pandemic and skyrocketing inflation have created a dangerous environment for countries in debt, as they may have borrowed beyond their budgets. Additionally, time is running out for countries to formulate a plan to pay those debts back; most countries and relief organizations cannot agree on the best debt repayment plan, and the longer they take to negotiate, the closer the deadline for repayment looms.
Gallagher, alongside the Boston University GDP Center, proposes a debt repayment plan based on the 80s Brady bonds, where creditors that reduce their required repayments from struggling countries will receive a bond backed by a guaranteed fund such as the World Bank that commits to payment on the remaining amount, giving countries more breathing room as they navigate debt restructurings. Explaining the motivations behind the proposal, Gallagher stated, “what gets the bondholders to the table is when they realize, ‘If I don’t give some kind of a haircut, in six months, I might get nothing.’”
Kevin Gallagher is a professor of global development policy at Boston University’s Frederick S. Pardee School of Global Studies, where he directs the Global Development Policy Center. He is the author or co-author of numerous books, including most recently, The Case for a New Bretton Woods (Wiley, 2022). Read more about Professor Gallagher on his Pardee School faculty profile.