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The New Approach to Sovereign Debt Restructuring: Setting the Incentives Right
Author: Mr. Carlo A Sdralevich and Mr. Biaggio Bossone
Series:
IMF Policy Discussion Papers
Volume/Issue:
Volume 2002: Issue 004
Language:
English
Publication Date:
01 Mar 2002
DOI:
https://doi.org/10.5089/9781451973594.003
ISBN:
9781451973594
ISSN:
1564-5193
Pages:
27
Keywords:
PDP; SDRM phase; SDRM payoff structure; SDRM framework; incentive structure; cost structure; SDRM failure; crisis resolution; private sector involvement; sovereign debt; debt default; Moral hazard; Debt sustainability analysis; Sovereign debt restructuring; Debt restructuring
Legal-disclaimer:
This Policy Discussion Paper should not be reported as representing the views of the IMF. The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Policy Discussion Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
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The paper discusses key incentive-related issues of the sovereign debt restructuring mechanism recently outlined by the IMF First Deputy Managing Director. The structure of incentives in the mechanism should be consistent with the principle of favoring market-oriented, voluntary solutions to financial crises. The paper frames the mechanism in the context of involving the private sector in financial crisis resolution (PSI), and identifies the conditions for setting up an appropriate incentive structure. The paper explores issues relating to the functioning of the mechanism, including access policy on IMF resources; the power to activate the mechanism; its relation with intermediate PSI instruments; and its impact on investment in emerging markets.
Cover IMF Policy Discussion Papers
IMF Policy Discussion Papers
ISSN:
1564-5193
Publisher:
International Monetary Fund