How to Make Sovereign Debt Restructuring Work Now - C. Randall Henning

The negotiations, the of the World Bank and the Fund, Indian, Japanese equivalent of the Agreed Minute of the Paris Club, and French (representing the Paris Club) officials and the pursuit of comparable treatment from announced that they would coordinate their debt private sector creditors would proceed as usual. [...] But the present proposal operates in writing (in the Memorandum of Economic and explicitly in the context of an IMF program and Financial Policies with the Fund and with the majority provides instead for an outright prohibition on of creditors) not to service or redeem debt owed to repayment of debt to official bilateral creditors. [...] The ability to During the review published in May 2022, the attract supplemental financing is important to policy with respect to arrears to private sector protect, but the Executive Board can and should and international financial institutions was do so in the course of exercising its authority revised, but the policy on arrears to official over policies and programs generally. [...] In light of the matter of arrears; and is so difficult to assess the recent cases of debt restructuring and the as to make effective implementation impractical delays in IMF programs, the Fund should now in the context of a particular program. [...] It is this policy that requires, when the however, these particular provisions of the LIOA borrower’s debt is not sustainable, creditors to policy do not protect the interests of traditional commit to entering restructuring negotiations creditors as much as delay the Fund’s help to with a view to reaching agreement prior to the borrower and debt restructuring, and thus completion of the first or s.