How Government Is Seeking To Restructure Public Debt Overseas

The UK has seen five years of economic uncertainty, with no sign of the country’s financial woes easing in the near future. Strict austerity measures have been brought in to attempt to reduce the government’s massive deficit, but these are proving fairly ineffective in the face of severe economic times. The effects of the financial crisis have been felt all over the world, with most large economies suffering in some capacity and citizens facing unemployment, poverty, homelessness and destitution. Not a pretty picture.

For years, now headlines have been screaming excitedly about Eurozone disasters, fiscal cliffs and national default. Countries such as Greece, Ireland and Portugal have received massive EU bailouts to prevent them defaulting on their debt, which is likely to have a domino effect on the rest of the Eurozone. France and Spain have encountered severe financial problems and the UK, along with many others, has had its credit rating downgraded. It is becoming increasingly clear that measures must be taken to tackle this crisis head on and find some alternative route to managing our spiraling debt crisis.

Debt restructuring is an option which many beleaguered countries are turning to in order to manage their debts without resorting to default. This is a system of reducing and renegotiating debt in order to continue functioning financially, with Greece’s recent debt restructuring being one of the largest of its kind.

How Government Is, Seeking To Restructure Public Debt Overseas

Reasons to restructure

Overseas creditors form the vast majority of lenders for the UK government, which is seeking to restructure and renegotiate its loan agreements with many of them in order to create breathing space and free up funds to stave off choking the economy further. The IMF is currently looking into how bailouts are handled for countries facing severe financial difficulties, with concerns arising that bailout funds are being used to bailout private creditors. It is proposing measures for private creditors to ‘bail in’ to the terms and conditions of bailout funds, including rescheduling debt. With this in mind, emergency loans are likely to carry increased criteria and not be given as freely as perhaps in the past. Although the UK government has not asked for a bailout fund, it is likely to consider restructuring its debt with its overseas lenders in a bid to make some headway in tackling the national deficit.

It has become clear over recent years that there is no easy answer to our ongoing global financial issues and that each government must take its own decisions over the best ways to handle its domestic affairs a matter somewhat complicated in the Eurozone due to the single currency. Restructuring debt is an option many countries have taken; with others likely to follow suit in the near future.

AUTHOR BIO: Sara is a financial writer who regularly writes and blogs on a series of economic issues. She regularly writes about debt consolidation. She firmly believes that companies like ConsolidatedCredit.co.uk is there for those who need help consolidating their debt.

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