Working Paper

Banking on seniority: the IMF and the sovereign’s creditors

Abstract: The programs designed by the International Monetary Fund during the Global Financial Crisis have shown more awareness of the importance of domestic demand for the prospects of economic recovery. Yet, the IMF has continued to do little about the late payments made by governments to domestic creditors and suppliers. In contrast, the greater protection historically awarded by the IMF to foreign creditors has endured throughout the recent crisis. The paper suggests that, in order to adequately balance foreign creditor seniority and growth objectives, the IMF may sometimes need to emphasize equitable burden-sharing across categories of creditors rather than privilege the interests of international bond markets.

JEL Classification: E60; F50;

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Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Globalization Institute Working Papers

Publication Date: 2014-05-13

Number: 175

Pages: 32 pages

Note: Published as: Erce, Aitor (2015), "Banking on Seniority: The IMF and the Sovereign’s Creditors," Governance 28 (2): 219-236.