Sovereign Debt Policy
The IIF’s policy work on sovereign debt centers around the implementation of the Principles for Stable Capital Flows and Fair Debt Restructuring. Since their endorsement by the G20 in 2004, the Principles have proven to be an effective framework for sovereign debt crisis prevention and crisis resolution that is widely referenced by debtors, official and private creditors, international financial institutions, and other stakeholders. The Principles, updated as of April 2022, are voluntary guidelines with four building blocks. The Principles aim to foster
Enhanced debt transparency and the timely flow of information between creditors and debtors to promote and maintain sustained market access
Close debtor-creditor dialogue and cooperation, mainly to avoid debt restructurings
In cases where debt restructuring becomes inevitable, the Principles aim to facilitate a voluntary, predictable, and orderly debt restructuring process based on:
Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring
The Group of Trustees is the guardian of the Principles for Stable Capital Flows and Fair Debt Restructuring and it oversees the work of the Principles Consultative Group (PCG). It consists of current and former leaders in global finance with exceptional experience and credibility. The Group currently has three co-chairs: Governor François Villeroy de Galhau of the Banque de France; Dr. Axel Weber, Chairman of the IIF; and Governor Yi Gang of the People's Bank of China.
The Group of Trustees meets once a year to review progress on implementation of the Principles within the framework of the international financial architecture and to review the implementation of the Principles as provided for in the Annual Report on the Implementation of the Principles. The Group's mandate includes:
Reviewing the evolution of the international financial system as it relates to emerging markets and other major debtor countries;
Reviewing the development of the Principles, including their implementation; and
Making proposals for modification of the Principles, if needed.
Principles Consultative Group
The Principles Consultative Group is tasked with monitoring and encouraging the practical application of the Principles for Stable Capital Flows and Fair Debt Restructuring. The group's membership includes finance ministry and central bank officials as well as senior representatives of the private financial community. Many of the PCG's members were instrumental in the formulation of the Principles. Regular PCG conference calls provide an opportunity to discuss implementation issues, country cases, and implications of developments in global capital markets. The PCG welcomes a number of regular observers, including representatives of the IMF and World Bank/IFC staff, the IADB, the EBRD, the BIS, the ECB and the Federal Reserve Bank of New York.
The Institute's deep involvement with investor relations and data transparency issues dates back to the mid-1990s. Through this work, the IIF has developed a set of 23 criteria for the evaluation of investor relations (IR) practices, which include criteria for the evaluation of the data dissemination practices of emerging market sovereign debt issuers. The IIF's recommendations for enhancing IR practices have been formulated into a set of Best Practices issued in 2005 and updated in 2022. The results of the IIF's annual evaluation of IR and data dissemination practices of key emerging market countries are published annually and since 2009, included in the annual Report on Implementation by the Principles Consultative Group.
Committee on Sovereign Risk Management (CSRM)
The IIF Committee on Sovereign Risk Management (CSRM, formerly known as the Special Committee on Crisis Prevention and Resolution) was established in 2001 in the wake of the Asian and Russian debt crises of the 1990s. It brings together senior market participants and experts from IIF member firms to guide the Institute’s policy work on critical issues related to the prevention and resolution of sovereign debt crises. The CSRM undertakes broad-based efforts to advance policy issues in economies confronting challenges related to debt management and public financial management more broadly, with a focus on sovereign debt crisis prevention and resolution as well as addressing debt crises as and when they occur. The Committee played an important role in the establishment of the Principles for Stable Capital Flows and Fair Debt Restructuring and supports the ongoing development of the voluntary contractual approach to sovereign debt restructuring. The CSRM also serves as a forum for coordinating private sector views during periods of sovereign debt distress. CSRM discussions inform IIF communications on sovereign debt policy issues. CSRM members are cross-sectoral, including banks, bondholders (including asset managers, insurers, pension funds and sovereign wealth funds), law firms and specialized sovereign advisory firms.
Debt Transparency Working Group (DTWG)
The IIF Debt Transparency Working Group (DTWG) is actively partnering with the OECD to operationalize the IIF Voluntary Principles for Debt Transparency, which are designed to promote transparency in private sector lending to vulnerable Poverty Reduction and Growth Trust (PRGT) countries. The G20 has expressed support for IIF's work on the Principles for Debt Transparency in the Communiqué of the Finance Ministers and Central Bank Governors Meeting in Fukuoka in June 8-9, 2019. The OECD, with the funding of the UK government and IIF members, is supporting the implementation of the IIF Voluntary Principles for Debt Transparency through the development of a digital platform that will serve to both receive and disseminate data on sovereign debt of emerging market and low-income countries, providing timeline and transaction-level data on lending, pricing and other terms to help better assess levels of sovereign indebtedness.