The IMF has worked to develop a set of lending practices that enable sovereign borrowers to resolve serious debt problems and restore economic growth, but also respect the right of private financial markets to enter into and enforce contractual obligations. However, the recent €30 billion loan to Greece — the largest financial package ever granted to a single country — was provided without deference to these policies and without a restructuring agreement. This brief contributes to the ongoing debate of how the international community should govern sovereign debt restructuring by examining the evolution of the IMF’s lending practices using case studies that illustrate both positive and negative experiences. This historical background provides context to the current challenges and assists in highlighting areas where urgent interventions are needed.
James M. Boughton is a CIGI Senior Fellow. He is a former historian of the International Monetary Fund (IMF), a role he held from 1992 to 2012. From 2001 to 2010, he also served as assistant director in the Strategy, Policy, and Review Department at the IMF. At CIGI, James’s research focuses on the evolution of Canada’s role in international governance since the 1940s and the potential for further evolution in the near future.
Domenico Lombardi is director of the Global Economy Program and a member of the executive management committee at the Centre for International Governance Innovation (CIGI). He also serves on the advisory boards of the Peterson Institute for International Economics and the Bretton Woods Committee in Washington, and is a member of the Steering Committee of the Asian Economic Panel.