A debt is a loan that arises when two or more parties enter a mutual contract in which one party agrees to lend money at a profit while the other commits to paying back the full loan amount after an agreed period. In short, it is a mutual agreement that creates a creditor (the lender) and a debtor (the borrower) through an exchange of funds (the loan). The borrower undertakes to meet general and specific conditions of the loan as prescribed by the lender because it is the lender’s money under transaction. Typically, these conditions include actions to be taken in order to avoid default and/ or actions to take in case of default. When nations borrow, it is referred to as sovereign debt. To that extent, a loan agreement is treated as an open document between or among the participants so that all details are disclosed and known ahead of committing the country. Every loan […]
PUBLIC FINANCE PART 3: DEBT RESTRUCTURING
