Sovereign Default, Private Sector Creditors and the IFIs

29 Pages Posted: 23 Mar 2009

See all articles by Emine Boz

Emine Boz

International Monetary Fund (IMF)

Date Written: March 2009


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. We analyze 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; the model predicts countercyclical IFI debt along with procyclical commercial debt flows, also matching other features of the data such as frequency of IFI borrowing and mean IFI debt stock.

Keywords: Working Papers

Suggested Citation

Boz, Emine, Sovereign Default, Private Sector Creditors and the IFIs (March 2009). IMF Working Papers, Vol. , pp. 1-27, 2009. Available at SSRN:

Emine Boz (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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