The Key IMF Policies in Sovereign Debt Restructuring

from Sovereign Debt Restructurings – Key IMF Policies and Challenges

The Fund’s Framework for Sovereign Debt Restructuring

• The IMF may lend beyond the normal access limits under four substantive criteria and subject to procedural safeguards (i.e., early Board involvement).

• 2nd criterion - a high probability that the member’s public debt is sustainable in the medium term

Exceptional Access

• Green zone – debt sustainable with high probability

• Grey zone - debt sustainable but not with high probability

• Red zone – debt is not sustainable

Higher scrutiny when lending above normal access

• 3rd criterion - prospects of gaining or regaining access to private capital markets within a timeframe and on a scale that would enable the member to meet its obligations falling due to the Fund.

The views expressed herein are those of the presenter and should not be attributed to the IMF, its Executive Board, or its management

The Key IMF Policies in Sovereign Debt Restructuring

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The Fund’s Framework for Sovereign Debt Restructuring

Exceptional Access

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The Fund’s Framework for Sovereign Debt Restructuring

Statutory solutions have been adopted or proposed in a few countries

Work to improve debt transparency is ongoing, with more work to come later this year

Other contractual features could also support timely and efficient restructurings

Model

Enhanced CACs are the market standard and are working well

The Key IMF Policies in Sovereign Debt Restructuring

This article is from:

Sovereign Debt Restructurings – Key IMF Policies and Challenges