1. IMF Lending Practices and Sovereign Debt Restructuring
- Author:
- Domenico Lombardi, James M. Boughton, and Skylar Brooks
- Publication Date:
- 06-2014
- Content Type:
- Policy Brief
- Institution:
- Centre for International Governance Innovation
- Abstract:
- The IMF has struggled for decades to develop a set of lending practices that enable sovereign borrowers to resolve serious debt problems and restore economic growth, but also respect the right of private financial markets to enter into and enforce contractual obligations. The challenge has always been to operate under a well-defined set of principles while dealing with each situation in a way that takes account of relevant circumstances. Recently, the international financial crisis that began in 2008 and the subsequent European sovereign debt crisis have raised this challenge to new heights. In providing €30 billion to Greece — the largest financial package ever granted to a single country — the IMF invoked greater discretion in its lending decisions to counteract potential "systemic" crises. By doing so, it entered a program without a restructuring agreement.
- Topic:
- Debt, Economics, International Trade and Finance, International Monetary Fund, and Reform