(There is no point in moaning, “It’s not our fault, we didn’t do anything wrong; we just got caught in the world backwash.” That’s partly true, but not helpful.) They have to be willing to call in their creditors to negotiate rollovers, ask the IMF for conditional loans, offer significant and credible internal reforms in return. Nowhere is this easy.
Governance and institutional arrangements CBL provides a tidy segue to my next theme – the importance of strong governance and institutional arrangements. As most who know me, I have always been a market-oriented economist. Unfortunately, there are many instances where market and self-discipline forces have been found wanting on their own.