Debt crises have long been a part of the international financial system. Until recently, this was primarily a problem for the developing countries. Lacking adequate financial resources at home, many developing countries borrowed from international lenders to finance their economic development. When they faced unsustainable debt service payments, they would typically seek assistance from the IMF. The IMF would provide short-term financing in return for macroeconomic adjustment and structural reform that would increase the borrowing countries’ debt service capacity in the medium run. In cases where a debtor country’s needs exceeded IMF financing and domestic adjustment, the IMF encouraged debt restructuring either through rescheduling or reduction. But, more often than not, both debtors and creditors were reluctant to begin debt restructuring, delaying it as long as possible, causing economic dislocation and financial instability.