Policy Papers

A number of sovereign debt restructurings over the past three years faced significant
delays but the cases are now moving forward. These delays slowed access of countries
to much needed Fund financial support, and alongside creditors’ efforts the Fund had
to find ways forward. With significant experience now gleaned from recent restructuring
cases, it is important to extract the lessons for Fund policies from this episode. Delays in
future Fund engagements need to be minimized where this can be done in a manner
consistent with restoring the member to medium-term external viability and ensuring
adequate safeguards for the Fund. Such delays can contribute to a deepening of debt
distress, making adjustment more difficult, exacerbating the debt problem, and creating
inefficiency costs for both the debtor and its creditors.