SOVEREIGN DEBT SUSTAINABILITY IN EMERGING MARKETS: RESTRUCTURING FRAMEWORKS, IMF INTERVENTIONS, AND FISCAL DOMINANCE IN COMPARATIVE PERSPECTIVE (2020–2026)
Keywords:
Sovereign Debt Sustainability, Debt Restructuring, IMF Conditionality, Fiscal Dominance, Emerging Markets, Common FrameworkAbstract
This study examines sovereign debt sustainability in emerging market economies in the aftermath of the COVID-19 shock, focusing on the interaction between debt restructuring frameworks, International Monetary Fund (IMF) interventions, and fiscal dominance dynamics. Using a structured comparative case analysis of Zambia, Ghana, Sri Lanka, and Argentina over the period 2020–2024, with forward-looking elements where restructuring processes remain ongoing, the study evaluates how policy sequencing, creditor coordination, and macroeconomic conditions influence debt stabilization outcomes.
Drawing on IMF country reports, World Bank data, and recent empirical literature, the analysis shows that debt restructuring consistently reduces short-term liquidity pressures but does not ensure long-term sustainability. The effectiveness of restructuring depends on timeliness, the depth of creditor participation, and the credibility of accompanying fiscal adjustments. IMF-supported programs provide an important policy anchor by supporting fiscal consolidation and signaling credibility to markets; however, their impact is constrained when restructuring processes are delayed or incomplete. Across all cases, fiscal dominance - manifested through inflation volatility, exchange rate instability, and central bank financing of deficits - emerges as a critical factor that can weaken both restructuring outcomes and policy effectiveness.
The findings suggest that sustainable debt outcomes require coordinated restructuring processes, realistic IMF program design, strengthened fiscal institutions, and credible monetary frameworks. The study contributes to the literature by integrating restructuring dynamics, IMF conditionality, and fiscal–monetary interactions within a single comparative framework, offering policy-relevant insights for managing sovereign debt distress in an increasingly fragmented global creditor environment.
