{
  "title": "Fund Support for Debt- and Debt-Service-Reduction Operations",
  "publication": "Policy Papers, March 16, 2021",
  "sourceUrl": "https://www.imf.org/en/publications/policy-papers/issues/2021/03/16/fund-support-for-debt-and-debt-service-reduction-operations-50266",
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  "summary": "The note concludes that the Fund could support a member’s use of buybacks, cash sweeteners, or collateral in the context of a Fund-supported program, provided that (i) debt restructurings using buybacks, cash sweeteners or collateral offer significant efficiency gains relative to debt restructurings",
  "sections": [
    {
      "heading": "Summary and main conclusion",
      "content": "- The note concludes that the Fund could support a member’s use of buybacks, cash sweeteners, or collateral in the context of a Fund-supported program, provided that:\n  - (i) debt restructurings using buybacks, cash sweeteners or collateral offer significant efficiency gains relative to debt restructurings that do not rely on such instruments, but are underpinned by a regular Fund-supported program; and\n  - (ii) an adequate cushion of non-multilateral debt remains after the operation.\n- The conditions under which buybacks, cash sweeteners or collateral can be expected to deliver significant efficiency gains are narrow and specified in some detail."
    },
    {
      "heading": "Findings on instruments (buybacks, cash sweeteners, collateral)",
      "content": "- Buybacks, cash sweeteners, or collateral may be supported by the Fund only if they deliver significant efficiency gains compared with traditional restructurings.\n- Efficiency gains must be demonstrable relative to debt restructurings that do not rely on these instruments but are supported by a regular Fund program.\n- An adequate cushion of non-multilateral debt must remain after the operation."
    },
    {
      "heading": "Policy implications and operational conditions",
      "content": "- Fund support is conditional and limited to cases meeting both the efficiency-gain and post-operation cushion requirements.\n- The note specifies narrow and detailed conditions under which buybacks, cash sweeteners or collateral are likely to be efficient."
    },
    {
      "heading": "Subject coverage and keywords",
      "content": "- Subject: Asset and liability management; Currencies; Debt reduction; Debt relief; Debt restructuring; Debt service; External debt; Financial crises; Money\n- Keywords: cash payment; Currencies; DDSR Policy; DDSRO operation; Debt reduction; Debt relief; Debt restructuring; Debt service; debtor country; fund staff; Fund-financed DDSROs; Fund-financing of buyback; Fund-supported DDSROs; PP; Sub-Saharan Africa\n\n---\n\n Content in this bundle\n\n- Policy Paper\n  - Policy Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/policy-papers/issues/2021/03/16/fund-support-for-debt-and-debt-service-reduction-operations-50266"
    }
  ],
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    "Published: March 16, 2021",
    "Series: Policy Papers",
    "DOI: https://doi.org/10.5089/9781513574110.007",
    "The note concludes that the Fund could support a member’s use of buybacks, cash sweeteners, or collateral in the context of a Fund-supported program, provided that:",
    "The conditions under which buybacks, cash sweeteners or collateral can be expected to deliver significant efficiency gains are narrow and specified in some detail.",
    "Buybacks, cash sweeteners, or collateral may be supported by the Fund only if they deliver significant efficiency gains compared with traditional restructurings.",
    "Efficiency gains must be demonstrable relative to debt restructurings that do not rely on these instruments but are supported by a regular Fund program.",
    "An adequate cushion of non-multilateral debt must remain after the operation.",
    "Fund support is conditional and limited to cases meeting both the efficiency-gain and post-operation cushion requirements.",
    "The note specifies narrow and detailed conditions under which buybacks, cash sweeteners or collateral are likely to be efficient.",
    "Subject: Asset and liability management; Currencies; Debt reduction; Debt relief; Debt restructuring; Debt service; External debt; Financial crises; Money",
    "Keywords: cash payment; Currencies; DDSR Policy; DDSRO operation; Debt reduction; Debt relief; Debt restructuring; Debt service; debtor country; fund staff; Fund-financed DDSROs; Fund-financing of buyback; Fund-supported DDSROs; PP; Sub-Saharan Africa",
    "**Policy Paper**"
  ],
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