Consumers looking to better understand their own financial situation and the financial situation of others would be wise to understand all aspects of debt and debt management, including those that may not technically apply to them. Understanding all aspects of debt and debt restructuring in SA may provide some insight into dealing with strenuous financial situations.
Although sovereign debt restructuring bears no direct influence on the daily affairs of the consumer, it is wise for consumers to understand that even a country can find itself over-indebted and in need of debt restructuring. This means that a country, just like the average consumer, will have to cut expenses and look for ways to reduce their debt.
It is pertinent to note though that countries that are in need of sovereign debt restructuring often increase taxes and suffer from high inflation rates and as a result consumers struggle to make their income keep up with the demands of a country in debt. This, in turn, could lead to consumers who become over-indebted in an attempt to keep up.
Not quite as simple as regular debt restructuring in SA, sovereign debt restructuring is a far more complicated task than simple debt counselling and involves various financial leaps, measures and plans. At the frontier of sovereign debt restructuring, we find organisations such as the International Monetary Fund (IMF) that investigate countries that need debt restructuring as well as sometimes providing funds to help a country restructure their debts.
One of the biggest problems that a country in need of debt restructuring faces is restoring the confidence to invest in that country. Sovereign debt restructuring can help restore that faith in the country, and rebuild an economy that may have faced collapse.
It is evident that debt and the need for debt restructuring in SA ranges from the average to consumer all the way through to companies, corporations and countries and if debt restructuring can help a country rebuild its finances, it can most certainly help an individual consumer on a much smaller scale.