[PEN-L:30374] IMF's plan for bankruptcy gaining favour

[Chris Burford <cburford@xxxxxxxxxx>]

The essence of this trend (see article below) is to make national
finances more rationally subordinate to the movements of international
finance capital. Probably to smooth the periodic devaluation of the
labour power of people other than those in the most developed capitalist
areas.

A step towards world government and a world legal system - in the
rational interests of finance capital of course.

Chris Burford

from stop the IMF list
http://lists.essential.org/mailman/listinfo/stop-imf



IMF's plan for bankruptcy gaining favour 
By Alan Beattie in Washington 
Published: September 17 2002 
Financial Times

The International Monetary Fund said on Tuesday that its radical plan for
an international bankruptcy procedure for sovereign governments was
gaining support ahead of its annual meetings next week.

Launching the IMF's annual report, Anne Krueger, its second-in-command,
also sounded notes of warning over the global economy and Brazil, one of
the most fragile large economies. "There are obviously downside
fragilities" to the global economic recovery, she said, adding that
it could be slower than previously thought.

German newspapers have reported leaks that the fund will reduce its
global growth forecast from 4 per cent to 3.7 per cent for next year when
it releases new projections next week.

Ms Krueger said she expected the fund's ministerial steering committee to
instruct it to draw up changes to its constitution to allow bankrupt
governments to negotiate with their debtors. "I am confident we will
get the endorsement . . . to move forward," she said.

The fund and its dominant Group of Seven shareholder governments are
pursuing a twin-track approach to sovereign bankruptcies, trying to
persuade emerging market governments to add special clauses to their
bonds to aid restructuring at the same time as working on the
"sovereign chapter 11" plan for a new judicial procedure.

The US, the IMF's largest shareholder, has shown more interest in the
first of these, but is keeping its options open on the second, regarding
it as a longer-term project and stressing the risks in putting it before
Congress. On Tuesday US treasury officials said that, contrary to recent
reports, this policy stance was unchanged.

Ms Krueger said Brazil's macroeconomic situation was "clearly
sustainable", but she warned that the high interest rates on its
bonds might require policy to be tightened if they did not fall.

The IMF has authorised a $30bn rescue package for Brazil. The programme
commits Brazil to keeping its primary fiscal surplus - the government
surplus before interest payments - at 3.75 per cent at least. The IMF's
annual report showed its Brazil package helping almost to triple the
commitments made under the fund's main lending instruments to about $50bn
in fiscal year 2002.

Ms Krueger said in Argentina, by contrast, recent actions by congress
suggested a lack of political consensus about what needed to be
done.