Time to scrap ‘financing assurances’?

Lee Buchheit is a professor of law (Hon.) at the University of Edinburgh.

A modern sovereign debt restructuring can be expected to unfold more or less as follows:

• The debtor country approaches the IMF for a program.

• The Fund staff prepares a Debt Sustainability Analysis (DSA).

• If the DSA pronounces the country’s debt as “unsustainable,” the IMF staff will insist that it promises to restructure its financial liabilities in…