Addressing Liquidity Challenges: A conceptual framework
IISD's contribution to the Global Sovereign Debt Roundtable
In this publication, the authors offer an analysis of the liquidity challenges facing sovereign states. They identify three key perspectives: the distinction between liquidity and solvency, the implications of rollover risks, and the financing needs for vital long-term investments. By clarifying these concepts, the authors lay the groundwork for impactful contributions to the policy debate.
Liquidity challenges have emerged as a critical issue for sovereign states, significantly affecting their debt management capabilities. This commentary introduces a conceptual framework that delineates three essential interpretations of liquidity challenges.
The first interpretation focuses on the distinction between liquidity and solvency, highlighting why debt sustainability is paramount for sovereigns. The second examines rollover risks, analyzing factors that affect a country's capacity to refinance its debts. Finally, the commentary emphasizes the necessity of securing adequate financing for long-term investments, which are vital for development and climate resilience.
By engaging with these interpretations, this publication sets the stage for critical discussions among policy-makers and provides a roadmap for navigating the complexities of sovereign debt.
Participating experts
You might also be interested in
Key takeaways from the Global Sovereign Debt Roundtable
Anahí Wiedenbrüg, Yanne Horas, and Fernando Morra analyze the proposals from the Global Sovereign Debt Roundtable aimed at addressing debt challenges faced by developing countries.
Toward a Coherent, Transformative Approach to Financing Sustainable Development, Climate, and Nature
Four key proposals for the Fourth Financing for Development Conference (FfD4) to create an integrated, equitable approach to financing climate, nature, and development goals.
What Will Happen at COP 29?
Talks at the 2024 UN Climate Change Conference (COP 29) will range from defining a way forward on finance through a new collective quantified goal (NCQG) to mitigation, and loss and damage. Ahead of negotiations in Baku, IISD’s Earth Negotiations Bulletin Team Lead Jennifer Bansard examines the agenda and breaks down what to watch as eyes turn to Azerbaijan.
Border Carbon Adjustment Mechanisms and Impacts on Vietnam
This report consolidates, analyzes, and presents views and perspectives of stakeholders from Vietnam on border carbon adjustment (BCA) schemes to contribute to the global debate on BCA good practices.