Ad hoc machinery in debt restructuring? Rethinking the lock-in of institutional agreements

On September 10, 2015, the UN General Assembly voted to adopt basic principles on the sovereign debt restructuring process to establish a clear framework for managing financial crises. In this paper, I draw on insights from the neoliberal institutionalist literature on the “lock-in” of institutional agreements to show that there are clear procedures for debt restructuring when examining agreements among states in three institutions: the IMF, the Paris Club, and Export Credit Agencies (ECAs). For example, creditor states require that debtor states be under an IMF arrangement before debt restructuring. After debt restructuring is completed, creditor and debtor states can benefit from export credit facilities. The empirical part of the paper finds that three (Indonesia, Kenya, and Nigeria) out of fourteen developing countries identified in an IMF study examining export credits and Paris Club debt restructuring illustrate these agreements through the process of debt restructuring followed by the extension of new export credits from ECAs.