IMF in Theory: Sovereign Debts, Judicialisation and Multilateralism
AbstractIt is argued that the successive regimes for restructuring sovereign debts, since the early 20th century have been shaped by the articulation of three institutional functions: information gathering and economic expertise, then third-party mediation, lastly policy enforcement, also called conditionality. Whereas these functions where integrated within the Fund during the 1980s’ debt crisis, mediation has now been outsourced, under the pressure of the demand by the private sector for a thorough judicialisation of the restructuring process. That is, its inscription within rather rigid procedural rules which would provide much more protection against the interests and the intervention of the sovereigns, especially G7 governments. Two responses to this demand have been formulated: the creation of a supra-national “bankruptcy court”, as envisaged in the SDRM proposal put forward by the IMF in 2001; and the reliance upon national courts, specifically those in which jurisdiction the initial debt contracts had been signed. This latter option corresponds to the contract-based approach to sovereign defaults based on Collective Action Clauses, which was eventually adopted in spring 2003. It is defended that outsourcing third-party mediation makes the IMF considerably much weaker, as it remains with only two functions and no consistent rules of interaction with its traditional partners – private investors and the government of debtor countries.
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Bibliographic InfoPaper provided by Sciences Po in its series Sciences Po publications with number 2004-21.
Date of creation: Dec 2004
Date of revision:
Multilateralism; Conditionality; Sovereign Debts; Judicialisation; IMF;
Find related papers by JEL classification:
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
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