Lending to Defaulters: The IMF Updates Its Lending into Arrears Policy

CIGI Policy Brief No. 175

August 29, 2022

The International Monetary Fund’s (IMF’s) “lending into arrears” policy outlines the criteria used by the IMF in deciding whether to loan to a country in default. This policy brief focuses on one of the conditions a country must meet when seeking debt relief from the IMF: it must engage in good faith negotiations with its creditors (known as the good faith criterion). The country must also implement significant financial reforms and provide assurances that it will be able to meet its financial obligations. This policy brief looks at the history of the lending into arrears policy, the controversy surrounding its use during Argentina’s 2005 debt restructuring and the May 2022 update to the policy.

About the Author

CIGI Senior Fellow Gregory Makoff researches issues in international financial policy, including the management of sovereign debt crises. He is an expert in sovereign debt and an experienced debt capital markets professional.