## Sovereign Debt Restructuring: A Playbook for Country Authorities (Updated version as of April 15, 2026)

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**Canonical URL:** [Sovereign Debt Restructuring: A Playbook for Country Authorities (Updated version as of April 15, 2026)](https://www.imf.org/-/media/files/about/faq/gsdr/041526-gsdr-restructuring-playbook.pdf)

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### Overview and purpose
- Non-binding summary of observed key steps, concepts, and processes in recent sovereign debt restructurings in the context of an IMF-supported program, notably under the Common Framework (CF).
- Aimed at country authorities considering a restructuring; based on observed practice for a typical default case.
- Relies on IMF-World Bank pre-restructuring debt sustainability analysis (DSA), IMF program parameters, and participating official creditors’ collective assessment to define needed debt treatment.

### Step 0 — Before the launch of the restructuring (preparatory actions)
- Decisions on whether to restructure and whether to request an IMF-supported program and World Bank/partner support rest solely with the debtor sovereign; early discussion with IMF and World Bank staff is advised.
- Determination of the restructuring envelope:
  - IMF staff develop the program macro-framework jointly with authorities, consistent with restoring debt sustainability and closing balance of payment (BOP) financing gaps.
  - IMF staff (jointly with World Bank staff for LIC DSF users) prepare a pre-restructuring DSA based on the macro-framework.
  - For CF cases: “the need for debt treatment, and the restructuring envelope that is required, will be based on the IMF-World Bank DSA and the participating official creditors’ collective assessment, and will be consistent with the parameters of an upper credit tranche IMF-supported program.”
- Key preparatory actions for authorities:
  - Mandate legal and financial advisors with significant sovereign restructuring expertise; agree on a sufficiently broad mandate (limit scope risks later complexity).
  - Advance debt data work to obtain clear, detailed public debt breakdown (domestic vs external) and creditor composition (multilateral institutions; official bilateral creditors; private creditors (bondholders and commercial banks/”non-bonded commercial debt”)).
  - If not done already, start reconciling loan-by-loan data with creditors.
  - Define a restructuring strategy including:
    - Choosing negotiation mechanism with official bilateral creditors: Common Framework (CF), Paris Club (PC), “PC+”, or separate negotiations. Observed practice: CF has helped timely, orderly processes for eligible countries.
    - Defining the perimeter of debt to be restructured (short-term debt—original maturity of one year or less—generally excluded; decision on domestic debt depends on financial stability and growth considerations).
    - Identifying the cut-off date (early clarity critical; new financing after cut-off excluded; recent cases: cutoff generally decided case-by-case by creditors, generally not later than the date of the SLA).
    - Defining broad contours of efforts from creditor groups while ensuring “comparability of treatment” (CoT) across creditors.

- Observed practice on CoT for CF-eligible countries:
  - CoT between official and private creditors:
    - Assessed by official bilateral creditors using 3 criteria:
      - The change in debt service over the IMF program;
      - The debt reduction in net present value (NPV) terms (New NPV / Old NPV), using a 5 percent discount rate;
      - The change in duration of the treated claims.
    - Enforced by official bilateral creditors through claw-back clauses in restructuring agreements or similar mechanisms.
  - For other countries, similar approaches are used; sometimes NPV calculations use two or more discount rates for sensitivity analysis.
  - Private creditor contracts may include clauses (e.g., most favored creditor clauses, loss reinstatement clauses).
- Start engaging with creditors early (very early engagement can precede SLA to gain time; deeper technical discussions require SLA and pre-restructuring DSA).

### Step 1 — From SLA to IMF program approval (timing observed: 2-3 months in best recent CF cases)
- Rapid IMF program in place is critical to stabilize the economy; moving from Staff-Level Agreement (SLA) to program approval requires certain conditions, including “financing assurances” from official bilateral creditors (commitment to deliver debt treatment consistent with restoring debt sustainability).
- Key actions and considerations:
  - Engage early with official bilateral creditors; rapid formation of an Official Creditor Committee (OCC) for CF-eligible countries.
  - If not in arrears to official bilateral creditors, a debtor can request a solution for ongoing debt service during negotiation—requires case-by-case creditor approval.
  - Engage with World Bank and other MDBs to maximize concessional financing; MDB indicative envelopes are subject to MDB policies and, for World Bank budget support, conditional on Bank assessment of macro framework and structural policy progress.
  - Engage early with private creditors (bondholders and non-bonded creditors such as banks); “good faith” engagement needed to meet IMF “lending into arrears” policy conditions.
  - Communications: consider an early all-creditor meeting to explain the economic situation and debt strategy; set up a dedicated ministry of finance webpage with detailed debt data and restructuring progress.
  - IMF and World Bank can facilitate early engagements, share macro framework and DSA, and the IMF can convene creditor meetings using “good offices”.
  - Be mindful of CoT considerations when engaging different creditor groups; provide appropriate information to support timely and orderly processes.

### Step 2 — From IMF program approval to agreement in principle with official bilateral creditors (timing observed: 6 months in best recent CF cases)
- Advancing IMF program (typically first review) expects reaching an Agreement in Principle (AIP) with official bilateral creditors that includes key restructuring parameters for official bilateral debt.
- Parallel engagement with private creditors accelerates overall restructuring:
  - Bondholder negotiations generally coordinated through bondholder committees; collective action clauses facilitate implementation via exchange offers.
  - For commercial banks/non-bonded creditors, the London Coalition’s voluntary Implementation Guide can inform formation of a Loan Creditor Committee.
  - To accelerate process, debtor may publish the three parameters against which CoT will be assessed once an AIP with official bilateral creditors is reached.
- Use of state contingent debt instruments (SCDIs):
  - Can help bridge creditor-debtor gaps but should not be the norm.
  - When used, SCDIs must have well-defined verifiable triggers and be consistent with debt sustainability and IMF program parameters in all scenarios.
  - SCDIs pose CoT challenges and can impact timelines.

### Step 3 — Finalizing the debt restructuring
- Official bilateral creditors (CF cases):
  - Move from AIP to signature of a “Memorandum of Understanding” (MOU) with OCC members, followed by bilateral agreements with each creditor.
  - Absent special circumstances, debtor could expect finalizing bilateral agreements within 12 months.
  - Publication of an “MOU implementation table” with regular updates on signature status can facilitate monitoring.
- Private creditors:
  - Bondholder process: agreement in principle with bondholders committee followed a few weeks later by a bond exchange (could occur in Step 2 or Step 3).
  - Parallel advancement with commercial banks/non-bonded creditors or their committee expedites overall process; sequencing may start with creditors holding larger claims.
  - Finalization mindful of CoT, debt sustainability, and IMF program parameters.
  - Official bilateral agreements typically include an assessment of private creditor treatment and claw-back clauses activated if CoT is not met.
  - Debtor should seek confirmation from official bilateral creditors that CoT is met and from IMF staff that agreements are consistent with debt sustainability and program parameters.

### Post-restructuring credit rating upgrades (observed practice)
- Progress in advancing restructuring is critical to obtain a credit rating upgrade.
- No strict quantified metric; rating decisions are case-by-case and judgment-based.
- Key factors influencing upgrade timing and magnitude include size and complexity of not-yet restructured debt.
- An upgrade can occur with a share of not-yet restructured debt provided such debt does not prevent the country from remaining current on new post-restructuring obligations.
- Recent post-restructuring upgrades included a share of not-yet restructured debt in the range of 5-10 percent.
- Recommended engagement with rating agencies:
  - Share information and data on debt composition and restructuring negotiation status.
  - Schedule deep-dive meetings ahead of rating committee cycles and send monthly data packs to inform rating decisions.

### Practical sequencing and timeframes (observed best-case CF experience)
- Early engagement by debtor authorities on Step 0 and Step 1 actions—debt data work, restructuring strategy, early creditor engagement—improves likelihood of meeting observed best-case timelines.
- Representative observed timings (best cases under the Common Framework):
  - Step 1 (SLA to IMF program approval): 2-3 months.
  - Step 2 (IMF program approval to AIP with official bilateral creditors): 6 months.
  - Step 3 (finalization of bilateral agreements): bilateral finalization often within 12 months absent special circumstances.
- Timely processes depend on multiple factors and these observed timelines do not represent commitments for future cases.

*Prepared by the Global Sovereign Debt Roundtable — “Sovereign Debt Restructuring: A Playbook for Country Authorities” (Updated version as of April 15, 2026).*

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_Source: https://www.imf.org/-/media/files/about/faq/gsdr/041526-gsdr-restructuring-playbook.pdf_