In pursuing its economic development objectives, a developing country typically will import capital from several sources and thus incur external debt obligations to a number of creditors, including governments, government agencies, multilateral institutions, and individual private banks or groups of banks. When such a country encounters balance of payments difficulties, in which the burden of servicing the external debt is an important element, the rescheduling or refinancing of the external debt to alleviate the debt burden may be an important step in that country’s efforts to overcome the balance of payments problem. Since it would be impractical, time-consuming, and inefficient for a debtor country to enter into separate rescheduling negotiations with each of its numerous creditors, a multilateral framework can be a focal point for rescheduling exercises. Such a framework, by bringing together the debtor and the official creditors, facilitates the rescheduling task by establishing general principles that will guide the renegotiations, including those that the country may undertake with its private creditors.
International Monetary Fund Copyright © 2010-2021. All Rights Reserved.