Preventing Sovereign Defaults

Norbert Gaillard

Chapter Chapter 3 in When Sovereigns Go Bankrupt, 2014, pp 23-31 from Springer

Abstract: Abstract Chapter 3 investigates how some investors have been able to interfere with the debtor’s economic policy by insisting that measures be taken to reduce the risk of default in the short and medium term. Such interference can be direct or may be more subtle. Section 3.1 analyzes the role played by certain financial and economic advisors to foreign governments, many of whom were affiliated with a public or private institution that was a creditor to the focal country. Section 3.2 addresses the concept of conditionality and shows how states, bankers, and such international institutions as the International Monetary Fund (IMF) have made their lending conditional on the implementation of specific policies. There is a specific focus on the conditionality imposed by the International Monetary Fund. The IMF’s policy instruments have traditionally involved currency devaluation to boost exports, anti-inflationary measures to restore monetary credibility, and fiscal restraint to reduce public indebtedness.

Keywords: Economic advising; Money doctor; Conditional lending; Conditionality; IMF; Adjustment program (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:spr:spbchp:978-3-319-08988-1_3

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DOI: 10.1007/978-3-319-08988-1_3

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