The debt convention refers to the set of international principles, rules, procedures, and structures to govern both debt crisis prevention and debt crisis resolution. In contrast, the Multilateral Sovereign Debt Resolution Mechanism (or debt workout mechanism) is a proposal to establish an independent body under UN auspices that is specifically designed to manage and resolve issues related to sovereign debt restructurings.

The debt convention would include the intergovernmental agreement to set up a permanent Multilateral Sovereign Debt Resolution Mechanism that ensures (a) the primacy of human rights over debt service and (b) a rules-based approach to orderly, fair, transparent, and durable debt crisis resolution, in a process convening all creditors. The mechanism would act as an independent institutional body and deal with the resolution of debt crises by responding to countries in default and/or in need of debt restructuring and cancellation.

The agreement of a debt convention, under the auspices of the UN, would ensure that reforms apply throughout the entire debt cycle, and not only in relation to debt resolution. In other words, the reforms would cover “the way in which debt is incurred, how debt instruments are issued, how debt management is structured, how debt sustainability is tracked and the options for debt workout”.