IMF sovereign debt restructuring framework: Origin, evolution and latest updates of its main components

Abstract

The first introductory manual of the IMF framework for Sovereign Debt Restructurings (SDRs) is introduced in this article. SDR processes, in which billions of dollars are negotiated, constitute key elements for the healthy recovery of an over-indebted economy. However, there are no academic works that analyze in depth the way in which the Fund organizes them. Based on official documents, this paper aims to bridge this gap by explaining how the components that shape the IMF SDR framework are articulated. To this end, the article analyzes: 1) the framework substantial and procedural rules in order to show it as an abstract normative structure as well as an action procedure applicable to specific cases; 2) the framework evolution, synthetically presenting the discussions that gave rise to its main components and justified its principal changes; 3) the framework latest updates, which modified sensitive areas of the Fund's surveillance and financing functions. This analytical perspective closes a logical circle that shows the IMF SDR framework in a historical and integral manner and also gives an idealistic insider view to what the Fund is and how it operates.