[stop-imf] IMF says US will block SDRM

[Robert Weissman]

IMF External Relations Department
Morning Press
                                            Monday, March 31, 2003

Today's Headlines

U.S. set to block `sovereign chapter 11` proposals
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The U.S. is preparing to block the IMF`s radical proposal for an
international bankruptcy procedure for insolvent governments, a move that
could kill the plan, the FT reported today. Officially, the U.S. has yet
to express an opinion on the final SDRM plan, which will be presented to
ministers at the IMF`s spring meetings in two weeks` time. But clear
indications from the U.S. Treasury, expressed in meetings with other
rich-country governments, are that it will withhold support from the SDRM.

The U.S., which is still formulating its tactics for the meetings, may
decide to leave the threat of the SDRM alive as an incentive for emerging
market countries to follow its alternative proposal for "collective
action" clauses to their sovereign bonds to ease restructuring
negotiations. But officials familiar with its thinking say the U.S. will
leave no significant chance of the mechanism being created under its
current administration. John Snow, the new U.S. Treasury secretary, has
indicated that he shares the view of Treasury Undersecretary for
International Affairs John Taylor, who much prefers collective action
clauses. Snow is also concerned that to push the change through Congress,
whose approval would be required to create the plan, would risk failure
and encourage lawmakers to start proposing damaging changes to the IMF,
the FT said.


According to Reuters, Bundesbank Vice President Juergen Stark on Saturday
sounded downbeat, in an interview with Germany`s Boersen Zeitung
newspaper, on the prospects for an agreement on resolving sovereign debt
crises at the April 12-13 meetings of finance ministers from the G-7
nations and the IMF. Asked if IMF efforts to develop a sovereign debt
restructuring mechanism would be put on ice, he said: =82=C4=FAWe will have=
 to
wait for the discussions in Washington. But it does seem that some of G-7
countries are not so interested in the SDRM as they were one and a half
years ago,=82=C4=F9 Stark said. He also said discussions on an associated p=
roposal
to include collective action clauses in bond contracts to ease debt
restructurings may also not result in one solution.