The COVID-19 pandemic has hit the global community with tremendous force, with developing countries particularly vulnerable to the economic and health implications of this crisis. For these countries, the economic costs of social distancing are even higher than in the US and Europe, and vulnerable SMEs, with low cash reserves, account for a much larger share of the economy. Such countries also have far more precarious health-care systems. The funds required to support vulnerable workers and businesses, as well as to treat COVID-19 patients, are significant.

Left to their own devices, financial markets will pick winners and losers. The winners will be those countries with enough capacity to issue safe bonds. They will be able to borrow huge amounts at rock-bottom interest rates. The losers will be those countries unable to raise funds to deal with the crisis, but capital will also move away, as it has already started to, precisely because of borrowing by the US, China, and European countries. It is little wonder, then, that more than 90 countries have already approached the International Monetary Fund for financial assistance.

A cascade of disorderly sovereign defaults now, when developing-country governments need to spend huge sums to keep their citizens healthy and their economies on life support, would have enormous human and economic costs, and sharply diminish our chances of containing the pandemic.

Who we are:

Columbia University Professor Patrick Bolton recently assembled a group of economists and legal scholars with expertise on sovereign debt defaults to start a conversation about the coming crisis. As this group began an active exchange about possible solutions, we came together to draft guidelines for how a standstill on debt service payments by sovereign borrowers might be implemented. Our goal was to provide best practices for implementation that would protect many of the world’s poorest nations from default as they grapple to deal with the economic impacts of the COVID-19 pandemic.


  • Patrick Bolton (Barbara and David Zalaznick Professor of Business,
    Columbia University)
  • Lee C. Buchheit (Honorary Professor, University of Edinburgh)
  • Pierre-Olivier Gourinchas (Professor of Economics, University of California at Berkeley)
  • Mitu Gulati (Professor of Law, Duke University)
  • Chang-Tai Hsieh (Phyllis and Irwin Winkelried Professor of Economics, University of Chicago; Co-Director of BFI Development Economics Initiative)
  • Ugo Panizza (Professor of Economics, The Graduate Institute Geneva)
  • Beatrice Weder di Mauro (Professor of International Economics, The Graduate Institute Geneva)