A New Approach to Sovereign Debt Restructuring

Much has been done to strengthen the architecture of the international financial system in the wake of the emerging market financial crises of the late 1990s, both in terms of crisis prevention and crisis management. But the lack of adequate incentives to ensure the timely and orderly restructuring of unsustainable sovereign debts has remained an important weakness. Staff and management of the IMF have been considering in recent months how to fill this gap, helped by suggestions from academics, the private creditor community, non-governmental organizations, national authorities, and our Executive Board.