In 2002, Anne Krueger (first deputy managing director of the International Monetary Fund – IMF), driven by the urgency of the debt crisis in Argentina, proposed a Sovereign Debt Restructuring Mechanism (SDRM) to IMF shareholders with the aim of “preserving asset values and protect[ing] creditors’ rights while paving the way toward an agreement that helps the debtor return to viability and growth”.

However, the proposal was ultimately shelved due to resistance from influential  IMF Board members, notably the US, which holds a de facto veto. Eleven years later, in April 2013, amidst the European (and particularly Greek) debt crisis and litigation against Argentina in the New York courts, the IMF undertook a review of its role in debt restructurings, looking at proposals to establish formal or informal statutory or institutional frameworks to improve them. Ultimately, the IMF Board and governors instructed the staff to focus more on technical, and  particularly contractual, improvements within existing policies.

The IMF’s failure to establish the SDRM over two decades ago, in a very different context, should not deter efforts to pursue a statutory reform of debt resolution. The proposal for the debt convention is a much more inclusive and comprehensive proposal than the IMF SDRM and, most importantly, it is intended to be independent from creditor-dominated institutions like the IMF