IMF clips

[Robert Weissman <rob@essential.org>]

Clips from the Preamble Center:

1. SMCP: US, JAPAN UNVEIL $5 BLN PACKAGE FOR ASIAN RESTRUCTURING
2. WSJ: INVESTORS RESIST EFFORTS TO FORCE THEM TO HELP BAIL OUT DEVELOPING
NATIONS
3. AFP: ARGENTINA, IMF AGREE ON NEW ADJUSTMENT PLAN, SEE GNP DROP

US, JAPAN UNVEIL $5 BLN PACKAGE FOR ASIAN RESTRUCTURING

The US and Japan have teamed with the World Bank and the ADB to unveil a $5 
billion aid scheme to accelerate the pace of bank and corporate
restructuring in 
Asia, reports the South China Morning Post. The Asian Growth and Recovery 
Program (AGRP) would lure cheaper private capital to finance refinancing costs 
in crisis-hit countries. "We initially will target mobilizing $5 billion in 
bilateral and multilateral support, which would be expected to raise
substantial 
additional amounts of private capital," US Treasury Undersecretary Timothy 
Geithner is quoted as saying.

Aid may include official guarantees of bond issues, loans, or other fund 
instruments to attract better rates, the story notes. "The next step in the 
initiative will be to develop country-specific programs." Japanese Finance 
Ministry Deputy Director-General Kiyoto Ido said.

The Thai government has submitted a proposal for how the AGRP could support 
reform, and other countries are expected to follow, the story says. Help will 
be contingent upon a commitment to financial reform and proving private-sector 
funding was lacking.

The restructuring plan for Thailand's financial sector, the cost of which is 
estimated at several billion dollars, yesterday received the support of the 
AGRP, notes La Tribune (p.6). Geithner said the ADB, the Bank, and the IFC 
would now work with Thailand to develop its proposals, continues the SCMP.
The AGRP will be part of a $10 billion joint initiative announced by the US, 
Japan, the World Bank, and the ADB at the APEC summit in Malaysia last
November. 
Yesterday's summit in Singapore-attended by the IMF, the EU, and the private 
sector-was the first follow-up meeting to discuss how such funds would be 
disbursed.

INVESTORS RESIST EFFORTS TO FORCE THEM TO HELP BAIL OUT DEVELOPING NATIONS. 

Institutional investors are resisting efforts by governments of wealthy
nations 
and the IMF to force them to help bail out financially troubled developing 
nations, the Wall Street Journal (p.A4) reports. In meetings with officials 
from the US, Europe and the IMF, investors are arguing that emerging-market 
governments should continue to make on-time payments on their bonds, even if 
they are allowed to delay or reduce payments on loans from banks and 
governments.

Until recently, the IMF encouraged or required borrowing governments to
keep up 
payments on their government bonds, but after spending tens of billions of 
dollars over the past two years, rich countries are growing tired of rescues 
largely financed by taxpayers, the piece adds. US, IMF and some European 
officials have demanded that Pakistan, Ukraine, and Romania reduce or delay 
their payments to holders of the government bonds, but bondholders are
fighting 
back, warning that such a change threatens the ability of emerging-market 
economies to borrow on bond markets just when they need foreign money most.
Investment bankers and others raised their concerns last month at a private 
meeting in Paris with US Deputy Treasury Secretary Lawrence Summers, and they 
are likely to gripe more at the meetings of the IMF and World Bank at the
end of 
this month, when officials review international efforts to redesign the global 
financial system to prevent future crises, the story says.


ARGENTINA, IMF AGREE ON NEW ADJUSTMENT PLAN, SEE GNP DROP. Argentina and the 

IMF have agreed on new austerity measures, including a $1 billion cut in
public 
spending, and forecast a 1.5-percent drop in the 1999 GDP, AFP says the
economy 
ministry said yesterday. IMF officials meeting with government authorities
also 
agreed to allow Argentina to increase its annual budget deficit by $2 billion, 
setting this year's level at $4.95 billion, Deputy Economy Minister Pablo 
Guidotti said.

Global financial turmoil shattered previous IMF recommendations, which had 
counted on 2.5-percent GDP growth, the story notes.

Guidotti also said the government agreed to send five bills to Congress to 
reform the fiscal accounts. The bills will, among other things, make balanced 
budgets obligatory and introduce cuts in government pension payments. In 
reference to the $1 billion in spending cuts, Guidotti said: "There were no 
discussions with the IMF on where the spending cuts will take place, and this 
matter will be decided within the cabinet."