Policy Papers

Policy Reform Proposals To Promote The Fund’s Capacity To Support Countries Undertaking Debt Restructuring

Publication Date:

April 16, 2024

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Summary:

A number of sovereign debt restructurings over the past three years faced significant delays but the cases are now moving forward. These delays slowed access of countries to much needed Fund financial support, and alongside creditors’ efforts the Fund had to find ways forward. With significant experience now gleaned from recent restructuring cases, it is important to extract the lessons for Fund policies from this episode. Delays in future Fund engagements need to be minimized where this can be done in a manner consistent with restoring the member to medium-term external viability and ensuring adequate safeguards for the Fund. Such delays can contribute to a deepening of debt distress, making adjustment more difficult, exacerbating the debt problem, and creating inefficiency costs for both the debtor and its creditors.

Series:

Policy Paper No. 2024/017

Subject:

Arrears Asset and liability management Debt restructuring Debt sustainability Debt sustainability analysis Emergency assistance External debt Foreign aid Monetary policy Political economy

Frequency:

occasional