{
  "title": "Sovereign Default, Private Sector Creditors and the IFIs",
  "publication": "IMF Working Papers, March 1, 2009",
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  "summary": "This paper builds a model of a sovereign borrower that has access to credit from private sector creditors and an IFI. Private sector creditors and the IFI offer different debt contracts that are modelled based on the institutional frameworks of these two types of debt.",
  "sections": [
    {
      "heading": "Summary of paper",
      "content": "- The paper builds a model of a sovereign borrower that has access to credit from private sector creditors and an IFI.\n- Private sector creditors and the IFI offer different debt contracts that are modelled based on the institutional frameworks of these two types of debt.\n- The paper analyzes the decisions of a sovereign on how to allocate its borrowing needs between these two types of creditors, and when to default on its debt to the private sector creditor.\n- The numerical analysis shows that, consistent with the data:\n  - the model predicts countercyclical IFI debt along with procyclical commercial debt flows;\n  - the model matches other features of the data such as frequency of IFI borrowing and mean IFI debt stock."
    },
    {
      "heading": "Model structure and institutional assumptions",
      "content": "- Sovereign borrower chooses allocation of borrowing between:\n  - private sector creditors (commercial debt);\n  - an IFI (multilateral development institution).\n- Debt contracts for each creditor type are explicitly modelled according to their institutional frameworks (as described in the paper)."
    },
    {
      "heading": "Key findings from numerical analysis",
      "content": "- Countercyclicality of IFI debt (IFI borrowing rises in downturns).\n- Procyclicality of commercial debt flows (private lending rises in upturns).\n- Matches data features including:\n  - frequency of IFI borrowing;\n  - mean IFI debt stock."
    },
    {
      "heading": "Subjects and keywords",
      "content": "- Subjects: Credit; Debt default; Emerging and frontier financial markets; External debt; Financial institutions; Financial markets; Multilateral development institutions; National accounts; Private debt; Public debt.\n- Keywords: Debt default; debt flow; default probability; Emerging and frontier financial markets; emerging markets; Global; IFI debt; IFIs; IMF debt; IMF lending; Multilateral development institutions; price schedule; Private debt; sovereign debt and default; WP.\n\n---\n\n Content in this bundle\n\n- wp0946\n  - wp0946 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp0946 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/sovereign-default-private-sector-creditors-and-the-ifis-22695"
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    "Authors: Emine Boz",
    "Published: March 1, 2009",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451871944.001",
    "The paper builds a model of a sovereign borrower that has access to credit from private sector creditors and an IFI.",
    "Private sector creditors and the IFI offer different debt contracts that are modelled based on the institutional frameworks of these two types of debt.",
    "The paper analyzes the decisions of a sovereign on how to allocate its borrowing needs between these two types of creditors, and when to default on its debt to the private sector creditor.",
    "The numerical analysis shows that, consistent with the data:",
    "Sovereign borrower chooses allocation of borrowing between:",
    "Debt contracts for each creditor type are explicitly modelled according to their institutional frameworks (as described in the paper).",
    "Countercyclicality of IFI debt (IFI borrowing rises in downturns).",
    "Procyclicality of commercial debt flows (private lending rises in upturns).",
    "Matches data features including:",
    "Subjects: Credit; Debt default; Emerging and frontier financial markets; External debt; Financial institutions; Financial markets; Multilateral development institutions; National accounts; Private debt; Public debt.",
    "Keywords: Debt default; debt flow; default probability; Emerging and frontier financial markets; emerging markets; Global; IFI debt; IFIs; IMF debt; IMF lending; Multilateral development institutions; price schedule; Private debt; sovereign debt and default; WP.",
    "**_wp0946**"
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