Working Paper
Debt Relief for Low-Income Countries

Arbitration as the Alternative to Present, Unsuccessful Debt Strategies

After analysing present, unsuccessful strategies of granting too little too late, a fair, transparent arbitration process (FTAP) on debts modelled after the principles of US Chapter 9 insolvency for debtors with governmental powers (municipalities) is needed. It would respect debtors’ sovereignty, provide a humane and economically efficient solution, respect the Rule of Law and the human right of debtor protection. Arbitration instead of creditor arbitrariness opens the way for meaningful debt reductions. The population would have a right to be heard by representation. Without FTAP crises are prolonged, damage is inflicted unnecessarily, mostly to the poorest, and development remains blocked.