The IMF is back with suggestions on sovereign debt restructuring. They published a paper on May 23 about the state of the sovereign debt restructuring. And mentions the Argentina judicial case in New York.
They promote debt restructurings, and sooner. "Restructurings have been too little and too late." Probably, the paper is too late to influence the NY panel in the Argentine case. An Amicus Curiae brief should have helped...
The IMF also promotes haircuts: remember the moral hazard. The theory is back. The losses should be borne by the private creditors too because they financed bad governments. Usually the IMF also participated in financing those bad governments. So....
And finally, the IMF is back with its SDRM, or Anne Krueger proposition, which is a bankruptcy systems for sovereign debts. Why? Because the Argentine legal case in NY is showing that the CACs will not be enough to deal with the holdouts. However... the SDRM may also fail, because it is also based on collective action from the creditor on aggregate basis, such as the new CACs. I guess that at least they must show something to help their members. Too little, too late.
Eugenio A Bruno
eab@garridolawfirm.com
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