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Sovereign debt restructuring: The centrality of the IMF's role

Sean Hagan ()
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Sean Hagan: Peterson Institute for International Economics

No WP20-13, Working Paper Series from Peterson Institute for International Economics

Abstract: Over the past 40 years, the International Monetary Fund (IMF) has played a central role in the sovereign debt restructuring process. If the COVID-19 pandemic leads to a significant wave of sovereign debt distress, this role will be closely scrutinized. The paper analyzes how IMF policies have evolved to shape the incentives of sovereigns and their creditors at each stage of the sovereign debt restructuring process. It also identifies a number of issues that the IMF will likely have to address as a result of the pandemic, including (1) assessment of debt sustainability in a macroeconomic environment of considerable uncertainty, (2) treatment of official bilateral creditors, and (3) potential benefits—and challenges—of introducing additional incentives to maximize creditor participation in any debt restructuring.

Keywords: Sovereign Debt; Debt Crisis; Debt Sustainability; IMF (search for similar items in EconPapers)
JEL-codes: F33 F34 K33 O19 (search for similar items in EconPapers)
Date: 2020-07
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