## 041526-gsdr-compendium-of-common-understanding-on-technical-issues

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### Restructuring Timelines
- Findings and agreed objectives:
  - From April 2024 GSDR Cochairs Progress Report:
    - Timelines remain beyond the typical time frame observed in the past, negatively impacting the debtor and its creditors.
    - Where applicable, in particular for Common Framework cases, the timeline to form an official creditor committee (OCC) could be shortened to take advantage of a format that ensures the fastest and most efficient sharing of information with all participants.
    - Absent specific circumstances impeding a timely decision-making, and provided sufficient information is being shared early and potential concerns being discussed, the proposal for the next debt restructuring case should be set as a trial example to aim for program approval within 2–3 months of SLA.
  - From April 2025 GSDR Cochairs Progress Report:
    - Shared objective: “Absent specific circumstances impeding a timely decision-making, and provided sufficient information is being shared early and potential concerns being discussed, a debt restructuring should aim at enabling program approval within 2–3 months of SLA, and an agreement in principle on the key parameters of the treatment about six months after program approval”.
  - From October 2025 GSDR Cochairs Progress Report:
    - GSDR work underlined protracted timelines when moving from OCC MOUs to actual bilateral agreements.
    - OCCs or/and debtors could publish timetables, with regular updates, on the status of signature of bilateral agreements to incentivize earlier progress and identify potential issues.
  - From April 2026 GSDR Cochairs Progress Report:
    - Practical steps could be implemented to ensure earlier finalization of bilateral agreements, so that “absent specific circumstances, the debtor could expect finalizing the bilateral agreements within 12 months of the MOU”, while preserving some flexibility.
    - Publication of an “MOU implementation table”, with regular updates on the status of signature of the bilateral agreements, could facilitate MOU implementation monitoring.
- Policy recommendations / operational steps:
  - Shorten timeline to form OCCs where applicable to improve information sharing and coordination with private creditors.
  - Aim for program approval within 2–3 months of SLA, and agreement in principle on key treatment parameters about six months after program approval (subject to case-specific circumstances and early information sharing).
  - Publish timetables and an “MOU implementation table” with regular updates on bilateral agreement signatures to incentivize progress and aid monitoring.

### Information Sharing
- Findings and guidance:
  - From October 2023 GSDR Cochairs Progress Report:
    - The IMF and the World Bank have published guidance to staff on information sharing in the context of sovereign debt restructurings (IMF Paper No. 2023/027: Staff Guidance Note on Information Sharing in The Context of Sovereign Debt Restructurings (June 2023); and Bank Guidance: Staff Guidance Note on Information Sharing in the Context of Sovereign Debt Restructurings).
  - From April 2025 GSDR Cochairs Progress Report:
    - Support for (i) a debtor-convened meeting of all official bilateral and private creditors, very early in the process, to explain the context and goals of the restructuring; (ii) engagement with OCC co-chairs and representatives of private creditors at specific points (e.g., once cut-off dates or scope of official bilateral creditor treatment has been agreed; and/or once a consensus around a debt treatment by official bilateral creditors has emerged).
    - Strengthening information sharing would support parallel negotiation between the debtor and different creditor groups and accelerate the overall process.
  - From October 2025 GSDR Cochairs Progress Report:
    - Early and continuous information-sharing between the restructuring debtor, creditor groups (OCC, bondholders committees etc.), and the IMF and World Bank is a key factor to support timely and efficient restructurings and to facilitate parallel rather than sequential negotiations when aligned with debtor strategy.
    - Debtor-convened early meetings reaffirmed; such meetings allow IMF and World Bank to share macroeconomic framework and debt sustainability analysis consistent with policies on information sharing, and to explain IMF debt and financing assurances policies and the World Bank’s requirements for budget support operations.
    - Enhanced information-sharing helps accelerate restructuring of non-bonded commercial debt.
    - Early and continuous engagement with CRAs, including updates on restructuring progress, can support early post-restructuring credit rating upgrades.
  - From October 2026 GSDR Cochairs Progress Report:
    - To accelerate restructuring and ensure private creditors have early information on comparability of treatment (CoT), the debtor can, if it meets its negotiation strategy, publish the three parameters against which CoT will be assessed (i.e., NPV reduction, change in debt service over the IMF program, and change in duration of the treated claims) as soon as it has reached an AIP with its official bilateral creditors.
- Policy recommendations / operational steps:
  - Convene an early debtor-led meeting of all official bilateral and private creditors to provide equal access to information.
  - Facilitate engagement between OCC co-chairs and private creditor representatives at key junctures (cut-off dates, scope agreements, consensus on official creditor treatment).
  - Share IMF and World Bank macroeconomic frameworks and DSAs as allowed under staff guidance to inform creditor negotiations.
  - Consider early publication of the three CoT assessment parameters once AIP with official bilaterals is reached, where consistent with debtor negotiation strategy.
  - Engage CRAs early and continuously to support post-restructuring rating outcomes.

### Restructuring Perimeter
- Classification of claims:
  - From October 2025 GSDR Cochairs Progress Report:
    - IMF classification of claims for its purposes does not determine their treatment in a restructuring.
    - The Fund uses a claim-by-claim analysis to determine classification of claims for purposes of Fund policies.
    - For efficiency, the Paris Club and CF OCCs often use an institution-by-institution approach to encompass a broader scope of claims in their treatments.
    - Close alignment between Paris Club/CF practice and the Fund’s definition has benefits, but exact one-to-one mapping is not necessary; treatments have differed on the margins without material complication.
  - From April 2026 GSDR Cochairs Progress Report:
    - Ongoing efforts to clarify treatment of different claims, particularly private loans backed by an export-credit agency (ECA).
    - For all OECD ECAs, the guaranteed portion of the underlying commercial loan would be treated as “official claim”, typically included in the perimeter of the OCC for Common Framework cases, even when the guarantee is not called.
    - Practices differ on the unguaranteed portion of the underlying commercial loan:
      - Some creditors treat the whole underlying commercial loan as part of the pool of official bilateral claims, including the unguaranteed portion.
      - Others distinguish the guaranteed portion (official bilateral claim) and the unguaranteed portion (commercial claim, to which CoT applies).
    - China clarified that all Sinosure-backed commercial loans are assessed as commercial, including for the portion that is guaranteed.
    - Practices are likely to remain diverse given different characteristics and institutional frameworks.
- Short-term debt:
  - From October 2023 GSDR Cochairs Progress Report:
    - Growing support to generally exclude short-term debt (original maturity of one year or less) from the restructuring perimeter.
    - Exclusion of short-term debt is common under Paris Club treatments and an explicit feature of the Common Framework, helping maintain access to trade finance.
    - Recent and ongoing restructuring cases, including outside the Common Framework, have similarly excluded short-term debt from restructuring perimeters.
- Domestic debt:
  - From October 2023 GSDR Cochairs Progress Report:
    - Domestic debt restructurings (DDRs) are complex and different from external debt restructurings (EDRs); domestic creditors’ losses can spread distress domestically.
    - No presumption ex ante that domestic debt should be included or excluded; analysis should be data-driven and country-specific.
    - Factors to consider include: overall level of public debt, share of domestic debt in total public debt, financial depth, legal features, currency and creditor composition of domestic debt, and social and political implications.
    - Decision to include domestic debt should be based on scenario analysis considering costs and benefits of different combinations of DDR and EDR, anchored in objective to restore debt sustainability while minimizing costs to financial stability, growth, social cohesion.
    - A single metric of comparable treatment for both DDR and EDR is unlikely appropriate; scenario analyses, communication and transparency are essential.
    - National authorities should explain to creditors the approach to domestic debt restructuring (including the absence of any DDR) and disclose domestic debt portfolio details regardless of whether DDR is pursued.
- Non-Resident Holders of Domestic Debt (NRHs):
  - From April 2024 GSDR Cochairs Progress Report:
    - Emerging consensus on treating NRHs on a case-by-case basis.
    - Some participants advocate inclusion of NRHs in the restructuring envelope if included in the DSA.
    - Others note NRHs are external creditors from the DSA perspective but hold instruments governed by domestic law, linking their treatment to domestic debt inclusion/exclusion decisions.
    - Further discussion needed to deepen understanding on this complex issue.
- SOE debt:
  - From April 2024 GSDR Cochairs Progress Report:
    - Limited progress toward consensus on SOE debt treatment.
    - Divergent views: some favor excluding SOE debt from DSA and restructuring envelopes; others view SOEs as relevant fiscal risk, especially in LICs, justifying inclusion in DSA perimeter under current LIC DSF (with limited exceptions).
    - Flexibility exists: creditors and debtor can agree on restructuring perimeters that differ from the DSA perimeter, with burden-sharing consequences.
    - SOE debt treatment will continue to be discussed, including as part of the review of the LIC DSF.

### Restructuring Parameters
- Cutoff dates:
  - From October 2023 GSDR Cochairs Progress Report:
    - Cutoff dates are key to protect new financing, including emergency support; early clarity is critical.
    - Flexibility warranted to account for case-specific circumstances.
    - In practice, cutoff dates have been decided case-by-case by creditors, generally not later than the date of the staff-level agreement (SLA), which protects new financing provided after the SLA.
- Comparability of Treatment (CoT) and consistency with debt restructuring targets and IMF program parameters:
  - From April 2024 GSDR Cochairs Progress Report:
    - Assessing and enforcing CoT between official bilateral and private creditors remains a critical issue needing further clarification.
    - In recent and ongoing Common Framework cases, official bilateral creditors have been using an approach where CoT is:
      - Assessed using the three Common Framework criteria:
        i. The changes in nominal debt service over the IMF program period;
        ii. Where applicable, the debt reduction in net present value terms (NPV), using a “New NPV / Old NPV” formula and the discount rate of the LIC DSAs (currently 5 percent);
        iii. The extension of the duration of the treated claims; and
      - Enforced via mechanisms such as claw-back clauses and/or requests to remain in arrears vis-à-vis private creditors until a CoT-respecting agreement is found.
    - For restructurings outside the Common Framework, similar assessment and enforcement mechanisms have been used, with NPV calculations sometimes based on two or more discount rates for sensitivity analysis.
    - Official bilateral creditors seem intent to maintain this approach in future cases.
    - GSDR supports:
      - Enhanced information sharing and coordination across creditor groups on CoT metrics, including expected NPV relief. Official bilateral creditors should provide the debtor with clarity regarding quantitative metrics needed for CoT and the related room for maneuver; relevant information should be shared with other creditors to facilitate and accelerate restructuring.
      - Timely verification of consistency with debt targets and IMF program parameters. Timely information sharing on restructuring strategy by the debtor to IMF staff is key to confirm consistency and should happen before any restructuring agreement is made public.
    - Close coordination and exchange of information among the debtor, private creditors, official bilateral creditors, and the IMF is essential.
    - Private creditors and the debtor should ensure that, before finalizing and announcing an agreement in principle, verification is completed by the debtor with IMF staff on consistency with program parameters and with official bilateral creditors on CoT.
    - The described steps do not necessarily lead to a sequential process; parallel progress by different creditor groups is possible.

### Comparability of Treatment (CoT) and Parallel Negotiations
- From GSDR discussions:
  - “should this be the preference of the debtor, such parallel negotiations should be supported as this would strengthen the chance for a swift and efficient resolution.”
- From April 2025 GSDR Cochairs Progress Report:
  - “There has now been significant experience in the implementation of CoT. However, further efforts could be done to help debtors understand how CoT will be evaluated and how it can be explained to the different creditor groups.”
  - “GSDR discussions underlined the need for enhanced transparency and information sharing regarding the restructuring agreements reached by official creditor committees. There was a growing consensus that publication by official creditor committees of the key terms of their restructuring once an agreement is reached, based on their collective decision and on a case-by-case basis, would facilitate implementation of comparability of treatment across creditors.”
- From April 2026 GSDR Cochairs Progress Report:
  - “GSDR participants noted that the Paris Club has formed a position that CoT should be assessed at the level of each individual AIP reached with private creditors. While noting the position, some GSDR participants expressed the view that some flexibility or aggregation should be preserved in practice, when dealing with marginal or residual creditors.”

### Debt Swaps and Climate Resilient Debt Instruments
- Debt-for-nature/debt-for-development swaps:
  - From April 2024 GSDR Cochairs Progress Report:
    - “Discussions underlined widespread view that debt-for-nature/debt-for-development swaps can be a useful tool for liability management but are generally not appropriate for situations where debt restructuring is required. Overall cost-benefit analysis should be carefully undertaken. More work would be needed to standardize these instruments and make them more rapidly and cheaply scalable. Diverse views were expressed on the public support for these operations, often emphasizing the need for strong alignment of the development outcome of the swap and country priorities. Participants also noted the need to increase transparency of documentation and governance.”
- Climate Resilient Debt Clauses (CRDCs):
  - “Climate Resilient Debt Clauses (CRDCs) were generally viewed as useful initiatives and scaling up their use was largely supported.”
  - Technical issues identified for adoption and implementation beyond the ICMA standard term sheet; some official creditors shared successful experiences including such clauses in loans.
  - Expansion beyond hurricane events was identified as challenging due to limited data history; ongoing work to define standard clauses for other events viewed as promising.
  - “Transparency and clarity about the indicators triggering the clauses are critical.”

### Liability Management Operations (LMOs)
- From April 2025 GSDR Cochairs Progress Report:
  - “GSDR participants generally agreed that active voluntary LMOs can bring tangible benefits for certain countries. They can improve debt sustainability by easing the liquidity challenges; they can create space to finance development spending, which in turn, can generate higher growth and improve debt ratios. Of course, this would not be the case for all countries, and would depend on the specific situation of each country.”
- From October 2025 GSDR Cochairs Progress Report:
  - Consensus that LMOs are not appropriate in all circumstances, but well-designed, voluntary LMOs can help reduce short-term liquidity constraints and create fiscal space for growth-enhancing spending.
  - Effectiveness is country-specific and depends on careful structuring and transparent execution.
  - Support for publication of practical guidance to help country authorities navigate complex transactions and credit-enhancement structures, similar to the note on “Debt for Development Swaps“ published in July 2024 by IMF and World Bank staffs.
  - On credit enhancements:
    - While NPV-neutrality remains the benchmark for voluntary LMOs, exceptions may arise depending on instrument design and macro-fiscal context.
    - Importance of early and proactive communication with CRAs and the market.
    - Standardized frameworks for innovative instruments such as partial guarantees would facilitate execution and predictable treatment, underpinning early post-operation rating decisions.
- From April 2026 GSDR Cochairs Progress Report:
  - “Guarantees or insurances – provided by the official or the private sector – can make LMOs more effective by compressing borrowing costs, extending maturities, and broadening or strengthening investor demand. However, their impact depends on country context and the design of the specific operation. LMOs should not be seen as fit to any situation, nor coming without costs and risks.”
  - World Bank and IMF staff prepared a practical note to guide decisions when considering LMOs with credit enhancements.

### Engagement with Credit Rating Agencies (CRAs)
- From April 2024 GSDR Cochairs Progress Report:
  - Meetings with CRAs helped participants understand CRA approaches to different debt operations.
  - CRAs explained criteria to classify Distressed Debt Exchanges (DDEs): focus on reduction of value to holders relative to contractual terms and whether the exchange aims at avoiding default.
  - Participants asked about rating implications of debt swaps and liquidity relief operations, including G20 DSSI in 2020-21.
  - CRAs clarified:
    - Debt-for-nature/debt-for-development swaps are treated like any debt exchange (which may or may not imply distress).
    - Liquidity operations assessed case-by-case; may or may not qualify as DDEs.
  - Importance of increasing transparency, information sharing and communication emphasized; CRAs welcome closer engagement.
- From April 2025 GSDR Cochairs Progress Report on CRA assessments:
  - Partial guarantees:
    - Renewed interest in third-party sovereign guarantees as credit enhancement.
    - CRAs assess partial guarantees in several asset classes but less in sovereign space due to few transactions.
    - World Bank supported debt for education swap conducted by Code d’Ivoire in December 2024 cited as indicative of space to help countries via partial guarantees.
  - LMOs:
    - CRAs assess whether an LMO is a distressed event based on: (i) whether a buyback takes place at a significant discount and (ii) whether it is done to prevent a default.
    - Considerations include whether the sovereign still has market access, the size of the transaction, and whether the bond bought back matures in the short-term.
    - Criteria are not binding; significant element of judgement. Use of CACs indicates non-voluntary nature.
    - CRAs underline that early engagement with them is key; they cannot prescribe transaction structure but can point to past experiences and cases.
    - Issuers should consider proactive engagement with CRAs, using established frameworks to exchange confidential information.
- On post-restructuring credit rating upgrades:
  - CRAs explained sovereigns are upgraded once they have normalized relations with a significant majority of private creditors, not necessarily all.
  - No specific numerical threshold; judgment is case-by-case. Important to assess how disruptive holdouts could be and whether debtor has started good faith negotiations with all commercial creditors.
  - Emphasis on information sharing by debtor countries and CRAs to explain what keeps countries in default status.
- From October 2025 GSDR Cochairs Progress Report:
  - CRAs reiterated impossibility of strict quantified metrics; ratings rely on case-by-case approach including judgment.
  - Key factors that can trigger or delay post-restructuring credit rating upgrade include size and complexity of not-yet restructured debt.
  - An upgrade can happen even with a share of not-yet restructured debt, provided such debt does not prevent the country remaining current on new obligations.
  - Importance of sharing detailed debt composition and status of restructuring negotiations with CRAs.
  - Recent post-restructuring upgrades (e.g., Ghana) included a share of not-yet restructured debt in the range of 5-10 percent.

### Non-bonded Commercial Debt (bank loans and similar)
- From April 2025 GSDR Cochairs Progress Report:
  - Significant progress in timeliness and efficiency of restructuring official bilateral debt (notably via the Common Framework) and coordination with bonded debt via implementation of CoT clauses.
  - Coordination of bonded debt restructuring largely ensured by widespread use of CACs.
  - Restructuring of non-bonded commercial debt (typically commercial banks) lacks coordination mechanisms beyond application of CoT clauses by official bilateral creditors; debtors must negotiate with each creditor, which can be lengthy.
  - In practice, this often does not affect economic recovery if Fund-supported program advances and debtor negotiates in good faith to meet Lending into Arrears policy conditions.
  - World Bank can provide budget support financing conditional on satisfactory progress of debt restructuring consistent with an adequate macroeconomic policy framework.
  - GSDR participants explored issuing “good practices” on organizing restructuring processes and launching parallel negotiations early; agreed to continue work.
- From October 2025 GSDR Cochairs Progress Report:
  - Need for progress highlighted: no obvious coordination mechanism for non-bonded commercial creditors.
  - Support for public messaging from GSDR to raise awareness of importance of engaging early on restructuring non-bonded commercial debt to avoid protracted negotiations and potential negative impact on post-restructuring credit rating upgrades.
  - Debtors should ensure initial contracts with debt advisors extend to non-bonded debt restructuring.
  - Private creditor associations/coalitions should raise awareness among members on importance of early and timely engagement.
- From April 2026 GSDR Cochairs Progress Report:
  - Welcome for work by the London Coalition to improve restructuring of bank loans and other non-bonded commercial debt.
  - Particular welcome for the London Coalition’s proposed “Implementation Guide to Restructuring Private Sector Sovereign Loans” as a practical way to strengthen coordination where no established mechanism exists.

### State-contingent Debt Instruments (SCDIs)
- From October 2024 GSDR Cochairs Progress Report:
  - “SCDIs can help bridge the gap between borrower and creditors in certain restructuring negotiations where uncertainty is high, but they should not be the norm in debt restructurings.”
  - Agreeing on a fully defined debt treatment early brings greater certainty and efficiency than contingent restructuring, but SCDIs may be useful when uncertainty about economic outlook and repayment capacity is very high.
  - SCDIs are particularly relevant when major assumptions (e.g., new sources of revenues such as new oil fields) significantly impact the restructuring envelope.
  - When used, SCDIs should have:
    - well-defined verifiable triggers consistent with debt sustainability assessments and IMF program parameters in all scenarios;
    - possible payout caps and mechanisms to adjust payments up and down as conditions evolve;
    - market-friendly design where feasible (e.g., one-time tests and shorter-maturity instruments) to limit uncertainty, provided debt sustainability risks are managed.
  - SCDIs pose CoT challenges:
    - Assessing CoT is complicated by SCDIs due to higher uncertainty over cash flows.
    - Lack of agreement on whether CoT should be assessed ex ante (are official and private creditor SCDIs comparable?) or ex post (through revision or clawback clauses).
    - When private and official creditors have different SCDIs (or only one group has SCDIs), additional iterations across creditor groups may be required, impacting restructuring timeline.
    - Early engagement across creditor groups can facilitate common understanding of trade-offs.
    - GSDR members supported further clarity on SCDI treatment in CoT assessments via a specific workshop.
- From April 2025 GSDR Cochairs Progress Report:
  - If SCDIs are used, CoT implementation should include clarity on whether official bilateral creditors will re-open agreements if SCDIs are triggered (including because sustainability assessments must account for such payments).
  - “CoT can be assessed on an ex-ante basis when there is sufficient clarity on triggers, two-side contingent adjustments, and appropriate caps on the payoff. In the absence of such conditions, CoT could involve the use of ex-post clawback clauses. On balance, the series of GSDR meetings since October 2024 underlined a growing consensus that, when SCDIs are used, they should include clear triggers as well as caps on the payoff, to facilitate an ex-ante assessment of CoT which is preferable to an ex-post activation of clawback clauses.”

### Collateralized Financing from Private Creditors
- From October 2024 GSDR Cochairs Progress Report:
  - Benefits and risks of collateralized borrowing depend on specific financing terms.
  - Collateralized financing of projects where future revenue streams are directly linked to debt repayment, under adequate disclosures that mitigate mispricing risk for unsecured and secured creditors, has highest potential to benefit borrower and protect longer-term development relationships with creditors.
  - Collateralized financing can cause harm when one or more of the following apply:
    - (i) it does not improve borrowing terms;
    - (ii) it weakens debt sustainability;
    - (iii) it is inadequately disclosed; and/or
    - (iv) it does not respect negative pledge clauses.
  - Collateralization from private creditors poses challenges in restructuring: it may provide a creditor with de facto seniority on its claim.
  - Official sector coordination mechanisms (Paris Club, Common Framework, or informal coordination) anchor negotiations around fair burden sharing even if some official claims are secured.
  - Political will to find a solution is often more determining than presence/absence of collateral.
  - On private sector side, private collateral can lead to an impasse.
- From Section 3:
  - Official bilateral creditors may not stand ready to provide more debt relief to compensate a lower contribution of private creditors with collateralized claims than what would be consistent with the principle of comparability of treatment. In such situations, the IMF may not be in a position to provide financial support given the lack of prospects of a successful debt restructuring to restore debt sustainability.
  - In some cases, the specific features of certain resource-backed loan contracts can also make the use of the IMF’s Lending into Arrears Policy (LIA) impossible because, in practice, the debtor country cannot run arrears to its creditor.
  - Broad consensus on importance of increasing awareness on the benefits and risks of collateralized financing practices.
  - IMF and World Bank underlined the findings and policy considerations included in their 2020 note on “Collateralized Transactions: Key Considerations for Public Lenders and Borrowers” and 2023 note on “Collateralized Transactions: Recent Developments and Policy Considerations“, which can help countries assess these benefits and risks, and adopt mitigating measures where needed, including on transparency and disclosure.
  - “There was also general support on the importance to help debtor countries address these issues through trainings and technical assistance missions.”
  - From April 2026 GSDR Cochairs Progress Report: “GSDR discussions noted the role collateralized lending can play, while emphasizing the importance to use it transparently and appropriately. Recent cases of opaque and complex arrangements involving financial collateral involve significant risks. It is difficult to assess the scale of financial collateralization since data is often not published, which undermines sound lending and borrowing decisions. Similarly, the use of financial collateral raises important questions regarding its treatment in the event of a restructuring.”

### Debt Transparency, Debt Management and Debtor-Investor Relations
- From April 2025 GSDR Cochairs Progress Report:
  - Debt transparency is crucial to the global debt architecture. Recent efforts by various stakeholders have enhanced legal frameworks, debt recording, data quality, standards, IT systems, debt reporting, and investor relations. These improvements foster informed decision-making, strengthen accountability and lower borrowing costs.
  - Debt data recording and dissemination has improved over time, and additional efforts in ongoing debt data reconciliation could bring further gains. However, further progress is needed to improve the timeliness and quality of data reporting and publication. In particular, undisclosed collateralized debt poses particular challenges.
  - GSDR participants generally agreed that debt transparency is primarily the responsibility of borrowing countries' authorities, but creditors also have a role to play, including by reconciling their claims with the borrower’s.
  - The reconciliation of loan by loan data reported by debtors countries to the World Bank’s Debtor Reporting System (DRS) with 17 Paris Club creditors showed promising results.
  - Given the urgency of debt transparency and accurate debt information, consideration should be given to the development of a digital platform to facilitate the automatic reconciliation of debt transactions between borrowers and official creditors, and generate real-time data.
  - Bolstering debt management processes and debt management offices is vital. Experience shows that, in many countries, certain borrowing can be done without clear and centralized processes that are necessary to monitor debt accumulation and ensure consistency with sound debt strategies.
  - Therefore, domestic legal and procedural debt frameworks, and debt management offices, must be strengthened. The international community can help through technical assistance and capacity building.
  - Investor confidence is key in maintaining or rebuilding financial flows. Transparency is essential to build that confidence. Strong investor relations serve as a “pull” factor for capital flows. Proactive engagement, such as regular investor briefings, transparent debt disclosure, and clear communication on future borrowing plans, helps sustain trust.
- From October 2025 GSDR Cochairs Progress Report:
  - “GSDR participants agreed on the importance of accurate debt data, which includes securing that the data in the debtor’s books match those held by each creditor. They reiterated that debt transparency is primarily the responsibility of borrowing countries' authorities, but creditors also have a role to play, including in reconciling creditor and borrower data.”
  - “They agreed that, while loan-by-loan reconciliation can deliver important gains, gaps persist. Improvements in the timeliness and quality of data reporting and publication are therefore warranted. Undisclosed collateralized debt obligations, in particular, raise important risks for both the debtor and its creditors.”
  - Broad support for, but not yet full consensus on, the World Bank’s proposal to extend its debtor/creditor data reconciliation initiative to all G20 creditors.
  - Automated debt data reconciliation would both alleviate the administrative burden for debtor countries and ensure availability of more recent data than currently available, for instance through the World Bank’s Debtor Reporting System (DRS). Many participants expressed strong interest in the World Bank’s proposal for a digital platform, building on the pilot launched with Indonesia.
  - Participants also agreed that strengthening debt management frameworks and offices and building further on debtor/investor relations to foster confidence and incentivize new inflows from private creditors, remains crucial. Strengthening domestic legal and operational frameworks remains essential.
  - Multilateral and bilateral partners should continue to support this effort through appropriate technical assistance and capacity building, including through the Debt Management Facility, implemented jointly by the World Bank and the IMF.
- From April 2026 GSDR Cochairs Progress Report:
  - “There is broad support to the World Bank’s ongoing creditor-debtor debt data reconciliation exercise, and for a GSDR recommendation for all G20 creditors to participate in it.”
  - “Sovereign Investor Relations (SIR) is a critical debt management function to ensure timely, consistent, and credible information sharing to market participants and stakeholders. SIR is not an alternative to sound and credible macroeconomic policies and cannot replace adjustments or restructuring when these are needed. But SIR can support financing strategies by informing clearly and in a timely manner creditors, investors, and credit rating agencies, thus reducing information asymmetries and strengthening confidence. SIR is particularly important in periods of heightened uncertainty and potential stress in international financial conditions, as well as country-specific debt vulnerabilities, including following a debt restructuring.”

### Debt Service Suspension and Treatment of Arrears
- From October 2023 GSDR Cochairs Progress Report:
  - On the issue of whether and how debt service could be suspended during the negotiation, in particular for Common Framework cases, some would support an automatic debt service suspension (DSS) on official bilateral claims from the point when an SLA has been reached for an IMF-supported program, which would provide debtors with liquidity relief at a time of major stress and incentivize creditors to expedite the process.
  - Others expressed preference for creditors and creditor committees to provide DSS at the country’s request (upon reaching an SLA), without automaticity.
  - Some consideration may be also given to granting debtor countries a time-limited debt suspension.
  - The proposal to provide a waiver on penalties on arrears accumulated during the negotiation, as opposed to arrears accumulated before, gained growing support.
  - Generally, arrears accrue at contractual rates (with a potential penalty). However, the treatment of arrears accumulated during the debt restructuring negotiation phase has varied. Many participants showed openness to provide a waiver on arrears penalties accumulated during the negotiation, subject to internal procedures and domestic approval where needed.
- From April 2025 GSDR Cochairs Progress Report:
  - “Building on recent experiences, in particular with Ethiopia, GSDR participants clarified that, if the debtor country undertaking a debt restructuring is not in arrears to its official bilateral creditors, it can always present a request for a debt service suspension to its official bilateral creditors, with the decision subject to creditors’ approval and assessed on a case-by-case basis.”
  - “Work should continue on how to treat Past-Due Interest (PDI), which tend to be higher for private creditors than for official bilateral creditors, thus potentially affecting the CoT assessments depending on its calculation date.”

### Support Provided by MDBs
- From October 2023 GSDR Cochairs Progress Report:
  - “GSDR Principals reached in April 2023 a common understanding on the role of MDBs to support countries undertaking a debt restructuring through the provision of net positive flows of concessional finance and grants.”
  - Subsequent meetings helped explain how the International Development Association’s (IDA), for example, provides not only net positive flows, but also ex-ante implicit debt relief through increased concessionality and grants to countries facing higher risks of debt distress.
  - Members underlined the importance of MDBs’ financial support.

*Global Sovereign Debt Roundtable — Compendium of GSDR Common Understanding on Technical Issues (Version as of: April 15, 2026)*

### Section 1

### Restructuring Timelines

### Findings and agreed objectives
- From April 2024 GSDR Cochairs Progress Report:
  - Timelines remain beyond the typical time frame observed in the past, negatively impacting the debtor and its creditors.
  - Where applicable, in particular for Common Framework cases, the timeline to form an official creditor committee (OCC) could be shortened to take advantage of a format that ensures the fastest and most efficient sharing of information with all participants.
  - Absent specific circumstances impeding a timely decision-making, and provided sufficient information is being shared early and potential concerns being discussed, the proposal for the next debt restructuring case should be set as a trial example to aim for program approval within 2–3 months of SLA.
- From April 2025 GSDR Cochairs Progress Report:
  - Shared objective: “Absent specific circumstances impeding a timely decision-making, and provided sufficient information is being shared early and potential concerns being discussed, a debt restructuring should aim at enabling program approval within 2–3 months of SLA, and an agreement in principle on the key parameters of the treatment about six months after program approval”.
- From October 2025 GSDR Cochairs Progress Report:
  - GSDR work underlined protracted timelines when moving from OCC MOUs to actual bilateral agreements.
  - OCCs or/and debtors could publish timetables, with regular updates, on the status of signature of bilateral agreements to incentivize earlier progress and identify potential issues.
- From April 2026 GSDR Cochairs Progress Report:
  - Practical steps could be implemented to ensure earlier finalization of bilateral agreements, so that “absent specific circumstances, the debtor could expect finalizing the bilateral agreements within 12 months of the MOU”, while preserving some flexibility.
  - Publication of an “MOU implementation table”, with regular updates on the status of signature of the bilateral agreements, could facilitate MOU implementation monitoring.

### Policy recommendations / operational steps
- Shorten timeline to form OCCs where applicable to improve information sharing and coordination with private creditors.
- Aim for program approval within 2–3 months of SLA, and agreement in principle on key treatment parameters about six months after program approval (subject to case-specific circumstances and early information sharing).
- Publish timetables and an “MOU implementation table” with regular updates on bilateral agreement signatures to incentivize progress and aid monitoring.

---

### Information Sharing

### Findings and guidance
- From October 2023 GSDR Cochairs Progress Report:
  - The IMF and the World Bank have published guidance to staff on information sharing in the context of sovereign debt restructurings (IMF Paper No. 2023/027: Staff Guidance Note on Information Sharing in The Context of Sovereign Debt Restructurings (June 2023); and Bank Guidance: Staff Guidance Note on Information Sharing in the Context of Sovereign Debt Restructurings).
- From April 2025 GSDR Cochairs Progress Report:
  - Support for (i) a debtor-convened meeting of all official bilateral and private creditors, very early in the process, to explain the context and goals of the restructuring; (ii) engagement with OCC co-chairs and representatives of private creditors at specific points (e.g., once cut-off dates or scope of official bilateral creditor treatment has been agreed; and/or once a consensus around a debt treatment by official bilateral creditors has emerged).
  - Strengthening information sharing would support parallel negotiation between the debtor and different creditor groups and accelerate the overall process.
- From October 2025 GSDR Cochairs Progress Report:
  - Early and continuous information-sharing between the restructuring debtor, creditor groups (OCC, bondholders committees etc.), and the IMF and World Bank is a key factor to support timely and efficient restructurings and to facilitate parallel rather than sequential negotiations when aligned with debtor strategy.
  - Debtor-convened early meetings reaffirmed; such meetings allow IMF and World Bank to share macroeconomic framework and debt sustainability analysis consistent with policies on information sharing, and to explain IMF debt and financing assurances policies and the World Bank’s requirements for budget support operations.
  - Enhanced information-sharing helps accelerate restructuring of non-bonded commercial debt.
  - Early and continuous engagement with CRAs, including updates on restructuring progress, can support early post-restructuring credit rating upgrades.
- From October 2026 GSDR Cochairs Progress Report:
  - To accelerate restructuring and ensure private creditors have early information on comparability of treatment (CoT), the debtor can, if it meets its negotiation strategy, publish the three parameters against which CoT will be assessed (i.e., NPV reduction, change in debt service over the IMF program, and change in duration of the treated claims) as soon as it has reached an AIP with its official bilateral creditors.

### Policy recommendations / operational steps
- Convene an early debtor-led meeting of all official bilateral and private creditors to provide equal access to information.
- Facilitate engagement between OCC co-chairs and private creditor representatives at key junctures (cut-off dates, scope agreements, consensus on official creditor treatment).
- Share IMF and World Bank macroeconomic frameworks and DSAs as allowed under staff guidance to inform creditor negotiations.
- Consider early publication of the three CoT assessment parameters once AIP with official bilaterals is reached, where consistent with debtor negotiation strategy.
- Engage CRAs early and continuously to support post-restructuring rating outcomes.

---

### Restructuring Perimeter

### Classification of claims
- From October 2025 GSDR Cochairs Progress Report:
  - IMF classification of claims for its purposes does not determine their treatment in a restructuring.
  - The Fund uses a claim-by-claim analysis to determine classification of claims for purposes of Fund policies.
  - For efficiency, the Paris Club and CF OCCs often use an institution-by-institution approach to encompass a broader scope of claims in their treatments.
  - Close alignment between Paris Club/CF practice and the Fund’s definition has benefits, but exact one-to-one mapping is not necessary; treatments have differed on the margins without material complication.
- From April 2026 GSDR Cochairs Progress Report:
  - Ongoing efforts to clarify treatment of different claims, particularly private loans backed by an export-credit agency (ECA).
  - For all OECD ECAs, the guaranteed portion of the underlying commercial loan would be treated as “official claim”, typically included in the perimeter of the OCC for Common Framework cases, even when the guarantee is not called.
  - Practices differ on the unguaranteed portion of the underlying commercial loan:
    - Some creditors treat the whole underlying commercial loan as part of the pool of official bilateral claims, including the unguaranteed portion.
    - Others distinguish the guaranteed portion (official bilateral claim) and the unguaranteed portion (commercial claim, to which CoT applies).
  - China clarified that all Sinosure-backed commercial loans are assessed as commercial, including for the portion that is guaranteed.
  - Practices are likely to remain diverse given different characteristics and institutional frameworks.

### Short-term debt
- From October 2023 GSDR Cochairs Progress Report:
  - Growing support to generally exclude short-term debt (original maturity of one year or less) from the restructuring perimeter.
  - Exclusion of short-term debt is common under Paris Club treatments and an explicit feature of the Common Framework, helping maintain access to trade finance.
  - Recent and ongoing restructuring cases, including outside the Common Framework, have similarly excluded short-term debt from restructuring perimeters.

### Domestic debt
- From October 2023 GSDR Cochairs Progress Report:
  - Domestic debt restructurings (DDRs) are complex and different from external debt restructurings (EDRs); domestic creditors’ losses can spread distress domestically.
  - No presumption ex ante that domestic debt should be included or excluded; analysis should be data-driven and country-specific.
  - Factors to consider include: overall level of public debt, share of domestic debt in total public debt, financial depth, legal features, currency and creditor composition of domestic debt, and social and political implications.
  - Decision to include domestic debt should be based on scenario analysis considering costs and benefits of different combinations of DDR and EDR, anchored in objective to restore debt sustainability while minimizing costs to financial stability, growth, social cohesion.
  - A single metric of comparable treatment for both DDR and EDR is unlikely appropriate; scenario analyses, communication and transparency are essential.
  - National authorities should explain to creditors the approach to domestic debt restructuring (including the absence of any DDR) and disclose domestic debt portfolio details regardless of whether DDR is pursued.

### Non-Resident Holders of Domestic Debt (NRHs)
- From April 2024 GSDR Cochairs Progress Report:
  - Emerging consensus on treating NRHs on a case-by-case basis.
  - Some participants advocate inclusion of NRHs in the restructuring envelope if included in the DSA.
  - Others note NRHs are external creditors from the DSA perspective but hold instruments governed by domestic law, linking their treatment to domestic debt inclusion/exclusion decisions.
  - Further discussion needed to deepen understanding on this complex issue.

### SOE debt
- From April 2024 GSDR Cochairs Progress Report:
  - Limited progress toward consensus on SOE debt treatment.
  - Divergent views: some favor excluding SOE debt from DSA and restructuring envelopes; others view SOEs as relevant fiscal risk, especially in LICs, justifying inclusion in DSA perimeter under current LIC DSF (with limited exceptions).
  - Flexibility exists: creditors and debtor can agree on restructuring perimeters that differ from the DSA perimeter, with burden-sharing consequences.
  - SOE debt treatment will continue to be discussed, including as part of the review of the LIC DSF.

---

### Restructuring Parameters

### Cutoff dates
- From October 2023 GSDR Cochairs Progress Report:
  - Cutoff dates are key to protect new financing, including emergency support; early clarity is critical.
  - Flexibility warranted to account for case-specific circumstances.
  - In practice, cutoff dates have been decided case-by-case by creditors, generally not later than the date of the staff-level agreement (SLA), which protects new financing provided after the SLA.

### Comparability of Treatment (CoT) between official bilateral and private creditors, and consistency with debt restructuring targets and IMF program parameters
- From April 2024 GSDR Cochairs Progress Report:
  - Assessing and enforcing CoT between official bilateral and private creditors remains a critical issue needing further clarification.
  - In recent and ongoing Common Framework cases, official bilateral creditors have been using an approach where CoT is:
    - Assessed using the three Common Framework criteria:
      i. The changes in nominal debt service over the IMF program period;
      ii. Where applicable, the debt reduction in net present value terms (NPV), using a “New NPV / Old NPV” formula and the discount rate of the LIC DSAs (currently 5 percent);
      iii. The extension of the duration of the treated claims; and
    - Enforced via mechanisms such as claw-back clauses and/or requests to remain in arrears vis-à-vis private creditors until a CoT-respecting agreement is found.
  - For restructurings outside the Common Framework, similar assessment and enforcement mechanisms have been used, with NPV calculations sometimes based on two or more discount rates for sensitivity analysis.
  - Official bilateral creditors seem intent to maintain this approach in future cases.
  - GSDR supports:
    - Enhanced information sharing and coordination across creditor groups on CoT metrics, including expected NPV relief. Official bilateral creditors should provide the debtor with clarity regarding quantitative metrics needed for CoT and the related room for maneuver; relevant information should be shared with other creditors to facilitate and accelerate restructuring.
    - Timely verification of consistency with debt targets and IMF program parameters. Timely information sharing on restructuring strategy by the debtor to IMF staff is key to confirm consistency and should happen before any restructuring agreement is made public.
  - Close coordination and exchange of information among the debtor, private creditors, official bilateral creditors, and the IMF is essential.
  - Private creditors and the debtor should ensure that, before finalizing and announcing an agreement in principle, verification is completed by the debtor with IMF staff on consistency with program parameters and with official bilateral creditors on CoT.
  - The described steps do not necessarily lead to a sequential process; parallel progress by different creditor groups is possible.

*Global Sovereign Debt Roundtable — Compendium of GSDR Common Understanding on Technical Issues (Version as of: April 15, 2026)*

### Section 2

### 041526-gsdr-compendium-of-common-understanding-on-technical-issues - Section 2

### Comparability of Treatment (CoT) and Parallel Negotiations
- GSDR discussion: “should this be the preference of the debtor, such parallel negotiations should be supported as this would strengthen the chance for a swift and efficient resolution.”
- From April 2025 GSDR Cochairs Progress Report:
  - “There has now been significant experience in the implementation of CoT. However, further efforts could be done to help debtors understand how CoT will be evaluated and how it can be explained to the different creditor groups.”
  - “GSDR discussions underlined the need for enhanced transparency and information sharing regarding the restructuring agreements reached by official creditor committees. There was a growing consensus that publication by official creditor committees of the key terms of their restructuring once an agreement is reached, based on their collective decision and on a case-by-case basis, would facilitate implementation of comparability of treatment across creditors.”
- From April 2026 GSDR Cochairs Progress Report:
  - “GSDR participants noted that the Paris Club has formed a position that CoT should be assessed at the level of each individual AIP reached with private creditors. While noting the position, some GSDR participants expressed the view that some flexibility or aggregation should be preserved in practice, when dealing with marginal or residual creditors.”

### Debt Swaps and Climate Resilient Debt Instruments
- From April 2024 GSDR Cochairs Progress Report on debt-for-nature/debt-for-development swaps:
  - “Discussions underlined widespread view that debt-for-nature/debt-for-development swaps can be a useful tool for liability management but are generally not appropriate for situations where debt restructuring is required. Overall cost-benefit analysis should be carefully undertaken. More work would be needed to standardize these instruments and make them more rapidly and cheaply scalable. Diverse views were expressed on the public support for these operations, often emphasizing the need for strong alignment of the development outcome of the swap and country priorities. Participants also noted the need to increase transparency of documentation and governance.”
- On Climate Resilient Debt Clauses (CRDCs):
  - “Climate Resilient Debt Clauses (CRDCs) were generally viewed as useful initiatives and scaling up their use was largely supported.”
  - Technical issues identified for adoption and implementation beyond the ICMA standard term sheet; some official creditors shared successful experiences including such clauses in loans.
  - Expansion beyond hurricane events was identified as challenging due to limited data history; ongoing work to define standard clauses for other events viewed as promising.
  - “Transparency and clarity about the indicators triggering the clauses are critical.”

### Liability Management Operations (LMOs)
- From April 2025 GSDR Cochairs Progress Report:
  - “GSDR participants generally agreed that active voluntary LMOs can bring tangible benefits for certain countries. They can improve debt sustainability by easing the liquidity challenges; they can create space to finance development spending, which in turn, can generate higher growth and improve debt ratios. Of course, this would not be the case for all countries, and would depend on the specific situation of each country.”
- From October 2025 GSDR Cochairs Progress Report:
  - Consensus that LMOs are not appropriate in all circumstances, but well-designed, voluntary LMOs can help reduce short-term liquidity constraints and create fiscal space for growth-enhancing spending.
  - Effectiveness is country-specific and depends on careful structuring and transparent execution.
  - Support for publication of practical guidance to help country authorities navigate complex transactions and credit-enhancement structures, similar to the note on “Debt for Development Swaps“ published in July 2024 by IMF and World Bank staffs.
  - Discussion on credit enhancements:
    - While NPV-neutrality remains the benchmark for voluntary LMOs, exceptions may arise depending on instrument design and macro-fiscal context.
    - Importance of early and proactive communication with CRAs and the market.
    - Standardized frameworks for innovative instruments such as partial guarantees would facilitate execution and predictable treatment, underpinning early post-operation rating decisions.
- From April 2026 GSDR Cochairs Progress Report:
  - “Guarantees or insurances – provided by the official or the private sector – can make LMOs more effective by compressing borrowing costs, extending maturities, and broadening or strengthening investor demand. However, their impact depends on country context and the design of the specific operation. LMOs should not be seen as fit to any situation, nor coming without costs and risks.”
  - World Bank and IMF staff prepared a practical note to guide decisions when considering LMOs with credit enhancements.

### Engagement with Credit Rating Agencies (CRAs)
- From April 2024 GSDR Cochairs Progress Report:
  - Meetings with CRAs helped participants understand CRA approaches to different debt operations.
  - CRAs explained criteria to classify Distressed Debt Exchanges (DDEs): focus on reduction of value to holders relative to contractual terms and whether the exchange aims at avoiding default.
  - Participants asked about rating implications of debt swaps and liquidity relief operations, including G20 DSSI in 2020-21.
  - CRAs clarified:
    - Debt-for-nature/debt-for-development swaps are treated like any debt exchange (which may or may not imply distress).
    - Liquidity operations assessed case-by-case; may or may not qualify as DDEs.
  - Importance of increasing transparency, information sharing and communication emphasized; CRAs welcome closer engagement.
- From April 2025 GSDR Cochairs Progress Report on CRA assessments:
  - Partial guarantees:
    - Renewed interest in third-party sovereign guarantees as credit enhancement.
    - CRAs assess partial guarantees in several asset classes but less in sovereign space due to few transactions.
    - World Bank supported debt for education swap conducted by Code d’Ivoire in December 2024 cited as indicative of space to help countries via partial guarantees.
  - LMOs:
    - CRAs assess whether an LMO is a distressed event based on: (i) whether a buyback takes place at a significant discount and (ii) whether it is done to prevent a default.
    - Considerations include whether the sovereign still has market access, the size of the transaction, and whether the bond bought back matures in the short-term.
    - Criteria are not binding; significant element of judgement. Use of CACs indicates non-voluntary nature.
    - CRAs underline that early engagement with them is key; they cannot prescribe transaction structure but can point to past experiences and cases.
    - Issuers should consider proactive engagement with CRAs, using established frameworks to exchange confidential information.
- On post-restructuring credit rating upgrades:
  - CRAs explained sovereigns are upgraded once they have normalized relations with a significant majority of private creditors, not necessarily all.
  - No specific numerical threshold; judgment is case-by-case. Important to assess how disruptive holdouts could be and whether debtor has started good faith negotiations with all commercial creditors.
  - Emphasis on information sharing by debtor countries and CRAs to explain what keeps countries in default status.
- From October 2025 GSDR Cochairs Progress Report:
  - CRAs reiterated impossibility of strict quantified metrics; ratings rely on case-by-case approach including judgment.
  - Key factors that can trigger or delay post-restructuring credit rating upgrade include size and complexity of not-yet restructured debt.
  - An upgrade can happen even with a share of not-yet restructured debt, provided such debt does not prevent the country remaining current on new obligations.
  - Importance of sharing detailed debt composition and status of restructuring negotiations with CRAs.
  - Recent post-restructuring upgrades (e.g., Ghana) included a share of not-yet restructured debt in the range of 5-10 percent.

### Non-bonded Commercial Debt (bank loans and similar)
- From April 2025 GSDR Cochairs Progress Report:
  - Significant progress in timeliness and efficiency of restructuring official bilateral debt (notably via the Common Framework) and coordination with bonded debt via implementation of CoT clauses.
  - Coordination of bonded debt restructuring largely ensured by widespread use of CACs.
  - Restructuring of non-bonded commercial debt (typically commercial banks) lacks coordination mechanisms beyond application of CoT clauses by official bilateral creditors; debtors must negotiate with each creditor, which can be lengthy.
  - In practice, this often does not affect economic recovery if Fund-supported program advances and debtor negotiates in good faith to meet Lending into Arrears policy conditions.
  - World Bank can provide budget support financing conditional on satisfactory progress of debt restructuring consistent with an adequate macroeconomic policy framework.
  - GSDR participants explored issuing “good practices” on organizing restructuring processes and launching parallel negotiations early; agreed to continue work.
- From October 2025 GSDR Cochairs Progress Report:
  - Need for progress highlighted: no obvious coordination mechanism for non-bonded commercial creditors.
  - Support for public messaging from GSDR to raise awareness of importance of engaging early on restructuring non-bonded commercial debt to avoid protracted negotiations and potential negative impact on post-restructuring credit rating upgrades.
  - Debtors should ensure initial contracts with debt advisors extend to non-bonded debt restructuring.
  - Private creditor associations/coalitions should raise awareness among members on importance of early and timely engagement.
- From April 2026 GSDR Cochairs Progress Report:
  - Welcome for work by the London Coalition to improve restructuring of bank loans and other non-bonded commercial debt.
  - Particular welcome for the London Coalition’s proposed “Implementation Guide to Restructuring Private Sector Sovereign Loans” as a practical way to strengthen coordination where no established mechanism exists.

### State-contingent Debt Instruments (SCDIs)
- From October 2024 GSDR Cochairs Progress Report:
  - “SCDIs can help bridge the gap between borrower and creditors in certain restructuring negotiations where uncertainty is high, but they should not be the norm in debt restructurings.”
  - Agreeing on a fully defined debt treatment early brings greater certainty and efficiency than contingent restructuring, but SCDIs may be useful when uncertainty about economic outlook and repayment capacity is very high.
  - SCDIs are particularly relevant when major assumptions (e.g., new sources of revenues such as new oil fields) significantly impact the restructuring envelope.
  - When used, SCDIs should have:
    - well-defined verifiable triggers consistent with debt sustainability assessments and IMF program parameters in all scenarios;
    - possible payout caps and mechanisms to adjust payments up and down as conditions evolve;
    - market-friendly design where feasible (e.g., one-time tests and shorter-maturity instruments) to limit uncertainty, provided debt sustainability risks are managed.
  - SCDIs pose CoT challenges:
    - Assessing CoT is complicated by SCDIs due to higher uncertainty over cash flows.
    - Lack of agreement on whether CoT should be assessed ex ante (are official and private creditor SCDIs comparable?) or ex post (through revision or clawback clauses).
    - When private and official creditors have different SCDIs (or only one group has SCDIs), additional iterations across creditor groups may be required, impacting restructuring timeline.
    - Early engagement across creditor groups can facilitate common understanding of trade-offs.
    - GSDR members supported further clarity on SCDI treatment in CoT assessments via a specific workshop.
- From April 2025 GSDR Cochairs Progress Report:
  - If SCDIs are used, CoT implementation should include clarity on whether official bilateral creditors will re-open agreements if SCDIs are triggered (including because sustainability assessments must account for such payments).
  - “CoT can be assessed on an ex-ante basis when there is sufficient clarity on triggers, two-side contingent adjustments, and appropriate caps on the payoff. In the absence of such conditions, CoT could involve the use of ex-post clawback clauses. On balance, the series of GSDR meetings since October 2024 underlined a growing consensus that, when SCDIs are used, they should include clear triggers as well as caps on the payoff, to facilitate an ex-ante assessment of CoT which is preferable to an ex-post activation of clawback clauses.”

### Collateralized Financing from Private Creditors
- From October 2024 GSDR Cochairs Progress Report:
  - Benefits and risks of collateralized borrowing depend on specific financing terms.
  - Collateralized financing of projects where future revenue streams are directly linked to debt repayment, under adequate disclosures that mitigate mispricing risk for unsecured and secured creditors, has highest potential to benefit borrower and protect longer-term development relationships with creditors.
  - Collateralized financing can cause harm when one or more of the following apply:
    - (i) it does not improve borrowing terms;
    - (ii) it weakens debt sustainability;
    - (iii) it is inadequately disclosed; and/or
    - (iv) it does not respect negative pledge clauses.
  - Collateralization from private creditors poses challenges in restructuring: it may provide a creditor with de facto seniority on its claim.
  - Official sector coordination mechanisms (Paris Club, Common Framework, or informal coordination) anchor negotiations around fair burden sharing even if some official claims are secured.
  - Political will to find a solution is often more determining than presence/absence of collateral.
  - On private sector side, private collateral can lead to an impasse.

*Source: 041526-gsdr-compendium-of-common-understanding-on-technical-issues - Section 2*

### Section 3

### 041526-gsdr-compendium-of-common-understanding-on-technical-issues - Section 3

### Collateralized financing: benefits, risks, and policy implications
- Official bilateral creditors may not stand ready to provide more debt relief to compensate a lower contribution of private creditors with collateralized claims than what would be consistent with the principle of comparability of treatment. In such situations, the IMF may not be in a position to provide financial support given the lack of prospects of a successful debt restructuring to restore debt sustainability.
- In some cases, the specific features of certain resource-backed loan contracts can also make the use of the IMF’s Lending into Arrears Policy (LIA) impossible because, in practice, the debtor country cannot run arrears to its creditor.
- There was broad consensus among GSDR participants on the importance of increasing awareness on the benefits and risks of collateralized financing practices.
- The IMF and World Bank underlined the findings and policy considerations included in their 2020 note on “Collateralized Transactions: Key Considerations for Public Lenders and Borrowers” and 2023 note on “Collateralized Transactions: Recent Developments and Policy Considerations“, which can help countries assess these benefits and risks, and adopt mitigating measures where needed, including on transparency and disclosure.
- “There was also general support on the importance to help debtor countries address these issues through trainings and technical assistance missions.”
- From April 2026 GSDR Cochairs Progress Report: “GSDR discussions noted the role collateralized lending can play, while emphasizing the importance to use it transparently and appropriately. Recent cases of opaque and complex arrangements involving financial collateral involve significant risks. It is difficult to assess the scale of financial collateralization since data is often not published, which undermines sound lending and borrowing decisions. Similarly, the use of financial collateral raises important questions regarding its treatment in the event of a restructuring.”

### Debt transparency, debt management and debtor-investor relations
- From April 2025 GSDR Cochairs Progress Report: GSDR participants underlined that:
  - Debt transparency is crucial to the global debt architecture. Recent efforts by various stakeholders have enhanced legal frameworks, debt recording, data quality, standards, IT systems, debt reporting, and investor relations. These improvements foster informed decision-making, strengthen accountability and lower borrowing costs.
  - Debt data recording and dissemination has improved over time, and additional efforts in ongoing debt data reconciliation could bring further gains. However, further progress is needed to improve the timeliness and quality of data reporting and publication. In particular, undisclosed collateralized debt poses particular challenges.
  - GSDR participants generally agreed that debt transparency is primarily the responsibility of borrowing countries' authorities, but creditors also have a role to play, including by reconciling their claims with the borrower’s.
  - The reconciliation of loan by loan data reported by debtors countries to the World Bank’s Debtor Reporting System (DRS) with 17 Paris Club creditors showed promising results.
  - Given the urgency of debt transparency and accurate debt information, consideration should be given to the development of a digital platform to facilitate the automatic reconciliation of debt transactions between borrowers and official creditors, and generate real-time data.
  - Bolstering debt management processes and debt management offices is vital. Experience shows that, in many countries, certain borrowing can be done without clear and centralized processes that are necessary to monitor debt accumulation and ensure consistency with sound debt strategies.
  - Therefore, domestic legal and procedural debt frameworks, and debt management offices, must be strengthened. The international community can help through technical assistance and capacity building.
  - Investor confidence is key in maintaining or rebuilding financial flows. Transparency is essential to build that confidence. Strong investor relations serve as a “pull” factor for capital flows. Proactive engagement, such as regular investor briefings, transparent debt disclosure, and clear communication on future borrowing plans, helps sustain trust.
- From October 2025 GSDR Cochairs Progress Report:
  - “GSDR participants agreed on the importance of accurate debt data, which includes securing that the data in the debtor’s books match those held by each creditor. They reiterated that debt transparency is primarily the responsibility of borrowing countries' authorities, but creditors also have a role to play, including in reconciling creditor and borrower data.”
  - “They agreed that, while loan-by-loan reconciliation can deliver important gains, gaps persist. Improvements in the timeliness and quality of data reporting and publication are therefore warranted. Undisclosed collateralized debt obligations, in particular, raise important risks for both the debtor and its creditors.”
  - There was broad support for, but not yet full consensus on, the World Bank’s proposal to extend its debtor/creditor data reconciliation initiative to all G20 creditors.
  - Automated debt data reconciliation would both alleviate the administrative burden for debtor countries and ensure availability of more recent data than currently available, for instance through the World Bank’s Debtor Reporting System (DRS). Many participants expressed strong interest in the World Bank’s proposal for a digital platform, building on the pilot launched with Indonesia.
  - Participants also agreed that strengthening debt management frameworks and offices and building further on debtor/investor relations to foster confidence and incentivize new inflows from private creditors, remains crucial. Strengthening domestic legal and operational frameworks remains essential.
  - Multilateral and bilateral partners should continue to support this effort through appropriate technical assistance and capacity building, including through the Debt Management Facility, implemented jointly by the World Bank and the IMF.
- From April 2026 GSDR Cochairs Progress Report:
  - “There is broad support to the World Bank’s ongoing creditor-debtor debt data reconciliation exercise, and for a GSDR recommendation for all G20 creditors to participate in it.”
  - “Sovereign Investor Relations (SIR) is a critical debt management function to ensure timely, consistent, and credible information sharing to market participants and stakeholders. SIR is not an alternative to sound and credible macroeconomic policies and cannot replace adjustments or restructuring when these are needed. But SIR can support financing strategies by informing clearly and in a timely manner creditors, investors, and credit rating agencies, thus reducing information asymmetries and strengthening confidence. SIR is particularly important in periods of heightened uncertainty and potential stress in international financial conditions, as well as country-specific debt vulnerabilities, including following a debt restructuring.”

### Debt Service Suspension and Treatment of Arrears
- From October 2023 GSDR Cochairs Progress Report:
  - On the issue of whether and how debt service could be suspended during the negotiation, in particular for Common Framework cases, some would support an automatic debt service suspension (DSS) on official bilateral claims from the point when an SLA has been reached for an IMF-supported program, which would provide debtors with liquidity relief at a time of major stress and incentivize creditors to expedite the process.
  - Others expressed preference for creditors and creditor committees to provide DSS at the country’s request (upon reaching an SLA), without automaticity.
  - Some consideration may be also given to granting debtor countries a time-limited debt suspension.
  - The proposal to provide a waiver on penalties on arrears accumulated during the negotiation, as opposed to arrears accumulated before, gained growing support.
  - Generally, arrears accrue at contractual rates (with a potential penalty). However, the treatment of arrears accumulated during the debt restructuring negotiation phase has varied. Many participants showed openness to provide a waiver on arrears penalties accumulated during the negotiation, subject to internal procedures and domestic approval where needed.
- From April 2025 GSDR Cochairs Progress Report:
  - “Building on recent experiences, in particular with Ethiopia, GSDR participants clarified that, if the debtor country undertaking a debt restructuring is not in arrears to its official bilateral creditors, it can always present a request for a debt service suspension to its official bilateral creditors, with the decision subject to creditors’ approval and assessed on a case-by-case basis.”
  - “Work should continue on how to treat Past-Due Interest (PDI), which tend to be higher for private creditors than for official bilateral creditors, thus potentially affecting the CoT assessments depending on its calculation date.”

### Support provided by MDBs
- From October 2023 GSDR Cochairs Progress Report:
  - “GSDR Principals reached in April 2023 a common understanding on the role of MDBs to support countries undertaking a debt restructuring through the provision of net positive flows of concessional finance and grants.”
  - Subsequent meetings helped explain how the International Development Association’s (IDA), for example, provides not only net positive flows, but also ex-ante implicit debt relief through increased concessionality and grants to countries facing higher risks of debt distress.
  - Members underlined the importance of MDBs’ financial support.

*Source: 041526-gsdr-compendium-of-common-understanding-on-technical-issues - Section 3 (PDF).*

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_Source: https://www.imf.org/-/media/files/about/faq/gsdr/041526-gsdr-compendium-of-common-understanding-on-technical-issues.pdf_