Chapter 2: Sovereign Debt and its Legal Framework
2. Sovereign debt and its legal framework HOW A SOVEREIGN ACQUIRES FUNDS There are various ways in which a sovereign can access external funds. These can be gotten through official and concessional sources, or from the commercial sector. As this book is interested in contracts which give rise to a liability on the part of the sovereign, concessional sources of funds will not be discussed.1 Official Sources There are two main categories of official funds for a sovereign. Multilateral The well-known Bretton Woods international financial institutions – the World Bank Group2 and the International Monetary Fund Concessional sources of funds include grants from non-governmental organizations. For a discussion of non-governmental concessional sources see D. Bradlow, International Borrowing: Negotiating and Structuring International Debt Transactions (3rd edn, Washington, DC: International Law Institute, 1994), Chapter 8. 2 The World Bank Group is a group of five international organizations responsible for providing finance and advice to countries for the purposes of economic development and eliminating poverty (the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of International Disputes (ICSID)). Technically the World Bank Group is part of the United Nations system, but its governance structure is different: Each institution in the World Bank Group is owned by its member governments, which subscribe to its basic share capital, with votes proportional to shareholding. Membership gives certain voting rights that are the same for all countries...
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