In the context of international finance and sovereign debt, a "haircut" refers to a reduction in the principal amount of debt that a debtor country owes to its creditors. For example, if a country owes $100 million and creditors agree to a 20% haircut, the country will only need to repay $80 million. Maturity extensions, on the other hand, involve lengthening the period over which the debtor country must repay its debt. For instance, if a debt is due in 5 years, a maturity extension might push this deadline to 15 years.