Reforming the IMF's Lending-into-Arrears Framework

14 Pages Posted: 14 Aug 2009

Date Written: April 14, 2008

Abstract

Episodes of sovereign default are typically associated with significant economic costs. The International Monetary Fund can help to mitigate these costs in a variety of ways, including by lending into arrears. Careful design of the broad policy framework governing the Fund’s involvement can help to ensure it has the maximum beneficial impact, without distorting the incentives of either the defaulting country or its creditors. This paper aims to identify some of the issues that are relevant to the design of such a framework, and which might helpfully be considered as part of the forthcoming review of the Fund’s lending-into-arrears policy.

Suggested Citation

Bedford, Paul and Irwin, Gregor, Reforming the IMF's Lending-into-Arrears Framework (April 14, 2008). Bank of England Financial Stability Paper No. 4, Available at SSRN: https://ssrn.com/abstract=1447912 or http://dx.doi.org/10.2139/ssrn.1447912

Paul Bedford

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Gregor Irwin (Contact Author)

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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