The IMFs role in sovereign debt restructurings (ECB Occasional Paper No. 2021/262)

60 Pages Posted: 18 Nov 2021

See all articles by Marco Committeri

Marco Committeri

Banca d'Italia

Benjamin Vonessen

European Central Bank (ECB)

Francesco Spadafora

Bank of Italy

Jose Ramon Martinez Resano

Banco de España

Patrick Kosterink

De Nederlandsche Bank

Dennis Essers

National Bank of Belgium

Raffaele De Marchi

Bank of Italy

M. Ines Marques Ferreira

Bank of Portugal

Mary Keeney

Central Bank and Financial Services Authority of Ireland

Alexander Lieber

Deutsche Bundesbank

Joanna Osinka

affiliation not provided to SSRN

Julien Arthur

Banque de France

Roman Vasil

National Bank of Slovakia

Date Written: September 1, 2021

Abstract

The global recession caused by the COVID-19 pandemic and the resulting deterioration in many countries’ public finances have increased the risk of sovereign debt crises. Although crisis prevention remains paramount, these developments have made it imperative to re-examine the adequacy of the current toolkit for crisis management and resolution, in a context where changes in the creditor base and in the composition of public debt instruments have brought about new challenges in terms of reduced transparency and additional barriers to achieving inter-creditor equity. This report focuses on the international architecture for sovereign debt restructurings (SODRs), as seen through the lenses of the International Monetary Fund (IMF or “the Fund”) and with a special attention to the role that the Fund can play in facilitating orderly restructuring processes. It provides a set of findings and recommendations in relation to certain key elements of the Fund’s lending framework that have important ramifications on SODR processes, namely debt sustainability assessments (DSAs), the exceptional access policy (EAP) for financing above normal access limits, and the criteria for lending to countries with payments arrears to private creditors (LIA) or official bilateral creditors (LIOA). It also considers other indirect channels through which the Fund can affect SODRs, including its support for enhancing the transparency and public disclosure of sovereign debt information, its collaboration with the Paris Club and the G20 debt-related initiatives, the promotion of contractual standards for sovereign debt, and the monitoring of relevant legislative developments.

Keywords: International Monetary Fund, sovereign debt, sovereign default, debt restructuring regime

JEL Classification: F34, F55, H63

Suggested Citation

Committeri, Marco and Vonessen, Benjamin and Spadafora, Francesco and Martinez Resano, Jose Ramon and Kosterink, Patrick and Essers, Dennis and De Marchi, Raffaele and Marques Ferreira, Maria Ines and Keeney, Mary and Lieber, Alexander and Osinka, Joanna and Arthur, Julien and Vasil, Roman, The IMFs role in sovereign debt restructurings (ECB Occasional Paper No. 2021/262) (September 1, 2021). Available at SSRN: https://ssrn.com/abstract=3964781 or http://dx.doi.org/10.2139/ssrn.3964781

Marco Committeri (Contact Author)

Banca d'Italia ( email )

Via Nazionale 91
Rome, 00184
Italy

Benjamin Vonessen

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Francesco Spadafora

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Jose Ramon Martinez Resano

Banco de España ( email )

alcala 50
Madrid, 28048
Spain
689238541 (Phone)
28048 (Fax)

HOME PAGE: http://www.bde.es

Patrick Kosterink

De Nederlandsche Bank ( email )

Netherlands

Dennis Essers

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

Raffaele De Marchi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Maria Ines Marques Ferreira

Bank of Portugal ( email )

Rua Francisco Ribeiro, 2
Lisbon, 1150-165
Portugal

Mary Keeney

Central Bank and Financial Services Authority of Ireland ( email )

P.O. 559 Dame Street
Dublin 2, D2
Ireland

Alexander Lieber

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Joanna Osinka

affiliation not provided to SSRN

Julien Arthur

Banque de France ( email )

Paris
France

Roman Vasil

National Bank of Slovakia ( email )

Imricha Karvasa 1
813 25 Bratislava
Slovakia

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