M-RCBG Senior Fellow-Led Study Group: David Grigorian
Wednesday, April 16, 4:15-5:45 M-RCBG Conference Room: B-102
Domestic debt restructurings impose direct costs on the local financial system making them inherently more complex to design than external debt restructurings. These costs are due to the existence of a typically strong nexus between sovereign and financial institutions (especially banks), which during episodes of sovereign stress could affect the balance sheet (both asset and liability side) and income of those institutions. Since the total cost of recapitalization of banks and safeguarding financial stability is likely to be an increasing function of haircut imposed on debt holders, beyond a threshold value of such haircut the marginal (and potentially even total) net debt relief accrued to the budget may become negative. This may also cause irreparable harm to the financial sector, potentially causing a crisis. Calibrating the parameters (most notably, the haircut) of a domestic debt restructuring to help avoid a financial crisis is important because debt restructurings accompanied by banking crises are historically associated with larger output losses.
Suggested reading:
International Monetary Fund, 2021. “,” IMF Policy Paper, December.
Das, Udaibir, et el., 2010. "," IMF Working Paper 10/280, December.
Grigorian, David A., 2023. “,” IMF Working Paper 23/24, February.
This study group / discussion is open to all HUID holders. Registration is not necessary.
M-RCBG welcomes individuals with disabilities to participate in its programs. To request accommodations or ask questions about access provided, please email: mrcbg@hks.harvard.edu
David Grigorian has had a successful career at the International Monetary Fund (IMF) in Washington, DC, having worked on some of the most visible and impactful IMF programs of the past two decades. Throughout his tenure at Monetary and Capital Markets Department, Dr. Grigorian has provided technical assistance advice to governments in a variety of emerging market and advanced countries on issues of sovereign debt restructuring, debt market development, and financial crisis management. For his role in helping the authorities of Jamaica restructure their sovereign debt in 2010, Dr. Grigorian received an Outstanding Effort Award from the IMF’s Managing Director. During 2016-18, Dr. Grigorian was in Asia Pacific Department, where he led the IMF mission to Bhutan and conducted oversight of financial sector in Singapore and Malaysia. In his previous position as the desk economist on Iraq, he helped the country authorities prepare the federal budgets for 2007-09 under occupation and complete two back-to-back Stand-By Arrangements that led to the world’s largest sovereign debt relief ever provided by the Paris Club. Prior to joining the IMF in 2001, Dr. Grigorian worked at the World Bank, where he managed banking sector restructuring projects in Central Asia. He holds a Ph.D. in Economics from the University of Maryland at College Park and has published extensively in refereed economic journals on a wide range of issues including sovereign debt, banking and capital markets, growth and institutions, remittances, and fiscal performance, and his research is cited widely. Dr. Grigorian also co-founded and led Policy Forum Armenia, a virtual anti-corruption think-tank uniting nearly 50 researchers and public policy professionals with interest in Armenia’s development. As an M-RCBG Senior Fellow, he will be focusing on sovereign debt restructuring issues. His faculty sponsor is Carmen Reinhart, Minos A. Zombanakis Professor of the International Financial System at Harvard Kennedy School. Email: dgrigorian@hks.harvard.edu