Responsible sovereign lending and borrowing as a response to the present and future financial and political crises

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My presentation at the CIMA EuroMed Forum - Kadir Has University, Istanbul, 13-15 April 2011

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Responsible sovereign lending and borrowing as a response to the present and future financial and political crises

  1. 1. Responsible sovereign lending and borrowing as a response to the current and future financial and political crises<br />CIMA, Euro-Mediterranean Forum , KadirHas University<br />Istanbul, 13-15 April 2011<br />George Papadopoulos, <br />Attorney at Law, <br />PhD cand. LL.M. (Univ. of Athens), <br />LL.M. (Univ. of Cambridge)<br />
  2. 2. “In finance, everything that is agreeable is unsound and everything that is sound is disagreeable”<br />Winston Churchill, 15 March 1926<br />
  3. 3. Sovereign debt. A factor of the current financial and political crisis<br />Excessive borrowing and mismanagement of public funds<br />Odious debts and financing of autocratic regimes<br />
  4. 4. Distinguishing features of sovereign debt<br />Features of sovereign debt that put responsible lending and borrowing at risk<br />Intergenerational tensions<br />Mixed motives for lenders<br />Legal immunity <br />Features of sovereign debt that (should) encourage responsible lending and borrowing<br />Fiduciary duties<br />
  5. 5.
  6. 6. Responsible sovereign lending<br />Realistic assessment of the borrower’s creditworthiness and its ability to repay the loan<br />Duty to inform and advise <br />Due diligence<br />Human rights considerations (cf. Equator Principles)<br />International law<br />
  7. 7. Responsible sovereign borrowing<br />Disclosure (Cf. IMF’s Special Data Dissemination Standard )<br />Rule of law<br />
  8. 8. Best practices (A)<br />Debt Management Offices <br />External Audit Mechanism<br />Independency (cf. INTOSAI’s Mexico Declaration)<br />Competence<br />Auditing disclosed debt information<br />Commenting on the fiscal and economic implications<br />Control of the legality and regularity of financial management and accounting<br />Performance audit (“value for money” audit; the 3Es)<br />
  9. 9. Best practices (B)<br />Contract Drafting<br />Exit consent<br />Collective Action Clauses (CACs)<br />Pro rata sharing clauses<br />Non-acceleration or no-action clauses<br />Collective representation or engagement clauses <br />Reframing paripassuclauses<br />
  10. 10. Responsible sovereign lending and borrowing principles in the context of debt renegotiations<br />Factual and legal obstacles<br />Possible solutions<br />Reexamining the role of Credit Rating Agencies (CRAs) <br />Through the Paris Club<br />
  11. 11. Legal Defences<br />Breach of duty to inform and advise<br />Breach of fiduciary duties<br />Corruption and fraud<br />Unclean hands – Abuse of right<br />
  12. 12. George PapadopoulosPhD (cand.), LL.M. (Univ. of Athens), LL.M. (Univ. of Cambridge) Contact: george-papadopoulos@cantab.net<br />

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