The IMF’s Lending Framework and Sovereign Debt Restructuring

Abstract:

The euro area crisis precipitated large IMF loans, co-financed by euro area governments. The Greek program in 
May 2010 required a change in the IMF’s framework for exceptional access arrangements, which was put into place 
following the 2001 Argentine crisis. The framework was meant to safeguard the resources of the IMF by setting out clear 
criteria that should be met before the Fund agreed to provide exceptionally large loans relative to a member country’s 
IMF quota. Four criteria were agreed to address capital account crises, including a requirement that the country’s debt 
would remain sustainable with high probability, with a good prospect for market re-access by the end of the program.