Sovereign debt workouts with the IMF as delegated monitor - a common agency approach
AbstractIMF programmes are frequently criticised for lacking focus and being ineffective in helping maintain private credit lines following a debt crisis. A theoretical model is developed to explore the interlinkages between result-based conditionality and creditor collective action problems. The strategic interactions between official and private creditors are highlighted, and some of the trade-offs that underpin the design of IMF programmes are clarified. Conditions under which official creditors are able to limit the efficiency losses generated by creditor non-cooperation and debtor moral hazard are identified. The circumstances under which official lending is able to catalyse private sector finance are also analysed.
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Date of creation: May 2003
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- NEP-ALL-2003-06-25 (All new papers)
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- NEP-MAC-2003-06-25 (Macroeconomics)
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