IIF Authors

Status: Will be live at 04/28/2022 10:48

The Principles for Stable Capital Flows and Fair Debt Restructuring, April 2022 Update

The Principles for Stable Capital Flows and Fair Debt Restructuring are a key element of the international sovereign debt architecture. 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:

  1. Enhanced debt transparency and the timely flow of information between creditors and debtors to promote and maintain sustained market access
  2. 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:

  1. Good faith actions and
  2. Fair treatment of “all” stakeholders

The updates focus on three broad areas:

  • Lessons learned from recent debt restructurings, highlighting the best market-based practices for sovereign debt crisis resolution.
  • Enhanced transparency and information sharing between creditors and sovereign borrowers: Obtaining timely and comprehensive information on public debt remains a challenge, and insufficient transparency negatively affects credit ratings, borrowing costs, and cross-border capital flows. The updated Principles reflect the IIF’s Voluntary Principles for Debt Transparency and their implementation through the IIF-OECD Debt Transparency Initiative’s data repository. In the event of restructuring, early and simultaneous engagement by debtor countries with all investors, as opposed to sequential information-sharing, is crucial.
  • Climate and ESG considerations in sovereign debt markets and their role in crisis prevention and sustained market access: The Principles seek to acknowledge the new reality that ESG now plays an important role in sovereign debt markets, with creditors and investors taking ESG factors into consideration for investment decisions. Investors are often now asking for ESG factors to be included explicitly in investor relations programs, and regular dialogue and data dissemination should thus include ESG.