Policy Papers

Under its Articles of Agreement, the Fund may only provide financing to assist members
to resolve their balance of payments problems and restore medium-term external
viability and may only do so under adequate safeguards. The Fund’s inter-related
policies on financing assurances, debt sustainability, and debt restructuring are relevant
for restoring medium-term external viability. This note is designed as a reference and
primer on these key sovereign debt-related Fund policies. It focuses on how to establish
that a program is “fully financed” (i.e., the financing assurances policy), how to handle
arrears owed by a member to its official and private creditors (i.e., the lending into
arrears policies), and how to establish safeguards for continued Fund lending at the
stage of program reviews (i.e., financing assurances reviews). It also provides guidance
on the more general role of the Fund in debt-restructuring situations. It is the first
comprehensive operational guidance on these policies, replacing the guidance
previously available at the departmental level. The relevant Fund Executive Board
Decisions remain the primary legal authority on matters covered in this note.