The New Approach to Sovereign Debt Restructuring: Setting the Incentives Right

Carlo Sdralevich and Biaggio Bossone

No 2002/004, IMF Policy Discussion Papers from International Monetary Fund

Abstract: The paper discusses key incentive-related issues of the sovereign debt restructuring mechanism recently outlined by the IMF First Deputy Managing Director. The structure of incentives in the mechanism should be consistent with the principle of favoring market-oriented, voluntary solutions to financial crises. The paper frames the mechanism in the context of involving the private sector in financial crisis resolution (PSI), and identifies the conditions for setting up an appropriate incentive structure. The paper explores issues relating to the functioning of the mechanism, including access policy on IMF resources; the power to activate the mechanism; its relation with intermediate PSI instruments; and its impact on investment in emerging markets.

Keywords: PDP; SDRM phase; SDRM payoff structure; SDRM framework; incentive structure; cost structure; SDRM failure; crisis resolution; private sector involvement; sovereign debt; debt default; Moral hazard; Debt sustainability analysis; Sovereign debt restructuring; Debt restructuring (search for similar items in EconPapers)
Pages: 27
Date: 2002-03-01
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=15661 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfpdp:2002/004

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Policy Discussion Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().