Overview and Concept

Once debt restructuring is achieved, what comes next? Stabilizing a distressed economy is necessary, but it cannot be the end goal: a path built only to maximize repayments in the short term leaves countries exposed to the next shock, starves investment and medium-term growth, and strains social support. Moving from stabilization to recovery requires the deliberate provision of fiscal space, new money and, above all, trust and coordination among the country in recovery, its creditors, and multilateral lenders. The IMF program, underpinned by a macroeconomic framework and conditionalities, is where that common ground is forged.

Despite well-known critiques, at least some recent debt restructuring cases seem to have remained more focused on stabilization than long-term development. The session will explore how countries that have recently undergone debt restructuring have fared and how policymakers can devise more pro-development strategies.

Guiding Questions

• Pivoting towards growth: How can countries respond to the challenge of stabilization without sacrificinginvestment and growth? In practice, the restructuring process seems often to take investment as anafterthought. How can investment be kept high and efficient even after a restructuring?
• Financing the recovery: Fiscal constraints tend to remain tight long after a debt treatment, FDI is difficultto attract, and domestic savings remain scarce. What can be done to finance the recovery and actuallyencourage investment?
• The political and social dimension: Human costs of restructuring are typically large and persistent.Social spending remains low for years, slowing human development. How have policymakers protectedthe poorest? What does it take to maintain the domestic consensus on which a multi-year programdepends? What are the key internal political constraints?
• Trust, coordination and comparability: Lengthy, poorly coordinated negotiations have raised costs anderoded trust. What would rebuild trust between borrowers, multilateral lenders and other creditors—andcould more transparent, comparable program reporting be part of the answer?