Front Matter

Front Matter

Harald Finger, and Mauro Mecagni
Published Date:
April 2007
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Sovereign Debt Restructuring and Debt Sustainability

An Analysis of Recent Cross-Country Experience

Harald Finger and Mauro Mecagni


Washington, D.C.


© 2007 International Monetary Fund

Production: IMF Multimedia Services Division

Typesetting: Choon Lee

Figures: Lai Oi Louie

Cataloging-in-Publication Data

Finger, Harald.

Sovereign debt restructuring and debt sustainability : an analysis of recent cross-country experience / by Harald Finger and Mauro Mecagni—Washington, D.C.: International Monetary Fund, 2007.

p. cm.—(Occasional paper; 255)

Includes bibliographical references.

ISBN 978-1-58906-610-6

1. Debt relief—Developing countries. 2. Debts, Public—Developing countries. 3. Financial crises—Developing countries. I. Mecagni, Mauro. II. Series: Occasional paper (International Monetary Fund); no. 255

HG3891.5.F46 2007

Keywords: Sovereign debt restructuring; debt sustainability; debt crisis; crisis resolution.

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The following conventions are used in this publication:

  • In tables, a blank cell indicates “not applicable,” ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.

  • An en dash (−) between years or months (for example, 2005–06 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2006).

  • “Billion” means a thousand million; “trillion” means a thousand billion.

  • “Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

As used in this publication, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.


In the difficult circumstances where a sovereign debt restructuring becomes unavoidable, restoring the country’s debt to a sustainable path is key to ensuring a credible and durable exit from the crisis. In recent years, a number of countries—including Argentina, the Dominican Republic, Ecuador, Moldova, Pakistan, Russia, Ukraine, and Uruguay—have had to restructure their sovereign liabilities, either following a default, or preemptively to avoid a default. This study takes stock of these countries’ experiences with debt-restructuring operations, with a view to assessing the outcomes and whether debt sustainability has been restored. The emphasis of the study is on sovereign debt owed to private creditors, and the analysis is based on information available as of late 2005.

The authors of this study, Harald Finger and Mauro Mecagni (Crisis Resolution Issues Division, Policy Development and Review Department), would like to extend a special thank you to Mark Allen, G. Russell Kincaid, and Matthew Fisher for their guidance and advice throughout the project, and gratefully acknowledge the helpful inputs provided by Julie Kozack, Axel Schimmelpfennig, Krishna Srinivasan, and Gabriel Sterne. They are also indebted to many other colleagues—in particular to Lisandro Abrego, Tomás Baliño, Roberto Benelli, Charles Blitzer, Odd Per Brekk, Nigel Chalk, Benedict Clements, Gabriel Di Bella, James Daniel, Stephanie Eble, Israel Fainboim, Robert Feldman, Lorenzo Figliuoli, Michael Gapen, Ioannis Halikias, Allison Holland, Abdelali Jbili, Olivier Jeanne, Timothy Lane, Cheng Hoon Lim, Armando Linde, Gabriel Lopetegui, Prakash Loungani, Erik Lundback, Alan MacArthur, Carlos Medeiros, Timothy Muzondo, Franziska Ohnsorge, Geremia Palomba, Helene Poirson, Thomas Richardson, Markus Rodlauer, Gabriela Rosenberg, Christoph Rosenberg, Alejandro Santos, Andrea Schaechter, Jerald Schiff, Teresa Ter-Minassian, John Thornton, Mercedes Vera Martin, Andrew Wolfe, Yingbin Xiao, and Jeromin Zettelmeyer—for their useful comments and suggestions.

Thanks are also due to Ivetta Hakobyan, who provided valuable research assistance; to Julia Velasquez and Cecilia Lon, who ably assisted in preparing the manuscript; and to Asimina Caminis (External Relations Department), who edited the manuscript and coordinated the production of the publication.

The opinions expressed in this study are those of the authors and do not necessarily reflect the views of the International Monetary Fund or its Executive Directors. The authors bear sole responsibility for any errors.

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