DEBT REORGANIZATION INVOLVING GOVERNMENT
Prepared by Richard Shepherd
Senior Economist
Government Finance Division
Statistics Department
International Monetary Fund
Paper presented at the fourth meeting of the Task Force on Harmonization of
Public Sector Accounting (TFHPSA)
Hosted by the International Monetary Fund
Washington, DC – October 3-6, 2005
The views expressed in this paper are those of the author(s) only, and the presence of
them, or of links to them, on the IMF website does not imply that the IMF, its Executive
Board, or its management endorses or shares the views expressed in the paper.
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DEBT REORGANIZATION INVOLVING GOVERNMENT
I. INTRODUCTION
Debt reorganization can be an important feature of economic transactions that occur in a
country and it is important that they be recorded correctly in the system of national accounts
and government finance statistics. Although debt reorganization may involve any unit in any
sector of the economy, this paper focuses on those debt reorganizations that involve a
government unit in some way. Although not included in the definition of debt reorganization
(see below), unilateral debt write-offs and defeasance arrangements are also included in this
paper. Appendix I discusses classification issues related to transactions involved in the
Highly Indebted Poor Countries (HIPC) debt relief initiative. Appendix II covers special
purpose entities (SPEs) that may be used in debt reorganization arrangements.
The transactions involved in a debt reorganization can be complex. However, the System of
National Accounts 1993 (SNA 1993) has only five paragraphs on the topic.1 This paper
discusses in more detail the various types of debt reorganizations and the transactions that
they may give rise to. It draws on the Government Finance Statistics Manual 2001 (GFSM
2001), the External Debt Statistics – Guide for Compilers and Users 2003, and ESA95
Manual on Government Deficit and Debt, First Editi