How the IMF did it—sovereign debt restructuring between 1970 and 1989

Between 1982 and 1989, the International Monetary Fund (IMF) acted as a third-party in a total of 109 debt restructurings between 41 debtor states and their creditor banks. At the core of these restructurings was the old Stand-By Arrangement (SBA), ie the standard IMF instrument for conditional lending to member-countries. The SBA was thus transformed into a three-way, voluntary arrangement that de facto rested on a rule of mutual veto. This self-sustained, though largely ad hoc procedure depended on the systematic ignoring of all hard-law or contract-based rules that could have shaped the debt restructurings. This article analyses: (i) how this regime emerged through trial and error during the 1970s; and (ii) how it was implemented, accounted for and justified after the 1982 Mexican crisis