What changes regarding debt sustainability are made in the revised ESM Treaty?

The ESM Treaty has since the ESM’s inception in 2012 included the requirement that the ESM should only provide stability support to countries whose debt is considered sustainable. The revised ESM Treaty will also require the confirmation of a country’s repayment capacity. The assessments on debt sustainability and repayment capacity will be conducted by the European Commission, in liaison with the ECB, and the ESM, on a transparent and predictable basis, while allowing at the same time a sufficient margin of judgement.

No changes are made regarding private sector involvement. The current ESM Treaty already addresses the point of an adequate and proportionate private sector involvement in accordance with long established IMF practice only in exceptional cases. Neither the current ESM Treaty, nor the revised Treaty make debt restructuring automatic.