Reported 5 months ago
Nishan de Mel, an economist from Sri Lanka, discovered a correlation between poor governance and government defaults, prompting him to propose a unique idea to bond investors that incentivizes governments to improve governance in exchange for reduced interest rates. This proposal is now a key element in Sri Lanka's $12 billion debt restructuring deal, receiving support from major creditors like BlackRock and T. Rowe Price Associates. The governance-linked bond would decrease Sri Lanka's interest rate if certain targets related to tax collection and transparency are met, potentially setting a precedent for addressing governance issues in emerging markets.
Source: YAHOO