How the IMF did it:

How the IMF did it:

sovereign debt restructuring between 1970 and 1989
by Jérôme Sgard
  • Board of Governors International Monetary Fund. Credits: WikipediaBoard of Governors International Monetary Fund. Credits: Wikipedia

In a recent article published in the Capital Markets Law Journal, Jérôme Sgard, researcher at CERI, analyses how the International Monetary Fund (IMF) acted as a third-party in a total of 109 debt restructurings between 41 debtor states and their creditor banks, how this regime emerged through trial and error during the 1970s; and how it was implemented and accounted for and justified after the 1982 Mexican crisis.


The saga of Argentina’s debt renegotiations since the 2001 default, followed by the chaotic experience of Greece after 2010, has reminded us how difficult it is to build a sustainable, well-accepted procedure for restructuring sovereign debts. Despite decades, if not centuries of experience, policy makers lack a solid body of principles and guidelines so that, again and again, each time this market is in crisis they are haunted by the same dilemmas. The first one is typically over who may declare that a country’s debt should be restructured, and by which criteria. Next come many more difficult questions about the place or jurisdiction where a settlement may take place, coordination and decision-making among the parties, or the link between a financial settlement and the monitoring of the debtor country’s policy commitments.

Since the mid-1990s this debate has increasingly focused on one subpart of this broad range of issues, namely decision-making among creditors. After the option of a specialized supra-national court was rejected in 2003,1 most contributions have focused on whether, and how...

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