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The New Approach to Sovereign Debt Restructuring: Setting the Incentives Right

Author

Listed:
  • Mr. Carlo A Sdralevich
  • Mr. Biaggio Bossone

Abstract

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.

Suggested Citation

  • Mr. Carlo A Sdralevich & Mr. Biaggio Bossone, 2002. "The New Approach to Sovereign Debt Restructuring: Setting the Incentives Right," IMF Policy Discussion Papers 2002/004, International Monetary Fund.
    • Handle: RePEc:imf:imfpdp:2002/004
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    Citations

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    Cited by:

    1. Curzio Giannini, 2003. "Towards a sovereign bankruptcy procedure and greater restraint in IMF crisis lending. An interim assessmen," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 56(225), pages 83-112.
    2. Curzio Giannini, 2003. "Verso una procedura fallimentare per il debito sovrano e maggiore disciplina nei finanziamenti del Fondo Monetario Internazionale. Una valutazione di mezza via," Moneta e Credito, Economia civile, vol. 56(222), pages 161-193.
    3. Curzio Giannini, 2003. "Towards a sovereign bankruptcy procedure and greater restraint in IMF crisis lending. An interim assessmen," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 56(225), pages 83-112.
    4. Chung, Yun Ho, 2003. ""Art and Science on" Nuancing Conflict: Theoretic Approach and Its Application," KDI Policy Studies 2003-02, Korea Development Institute (KDI).

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