Policy Papers

The Fund’s Lending Framework and Sovereign Debt - Preliminary Considerations

Publication Date:

May 23, 2014

Electronic Access:

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Summary:

As a follow-up to the Executive Board's May 2013 discussion, this paper considers a possible direction for reform of the Fund's lending framework in the context of sovereign debt vulnerabilities. The primary focus of this paper relates to the Fund's exceptional access framework, since it is in this context that the Fund will most likely have to make the difficult judgment as to whether the member's problems can be resolved with or without a debt restructuring. The objective of the preliminary approaches set forth in this paper is to reduce the costs of crisis resolution for both creditors and debtors—relative to the alternatives—thereby benefitting the overall system. These ideas are market-based and their eventual implementation would require meaningful consultation with creditors.

Series:

Policy Papers

Subject:

Access to capital markets Access to Fund general resources Concessional aid Debt restructuring Debt sustainability Exceptional use of Fund resources Members Sovereign debt