- Owner of Mary Jane Burgers & Brew in Perryville to open new culinary concept in Cape (9/15/17)3
- Man accused of setting fire to Delta bar; posted photos of it burning on Facebook (9/17/17)5
- McClure man accused of leaving children in hot truck while gambling in casino (9/19/17)1
- How the story of one dog is helping others (9/14/17)1
- Eyewitnesses testify about fatal shooting; men were using drugs, alcohol (9/14/17)
- Jury finds Harris guilty of murder, 3 other counts (9/15/17)4
- Retailer may come to Jackson; rezoning needed first (9/17/17)2
- New boutique store advocates for special-needs people (9/19/17)
- Planet Fitness to anchor Town Plaza shopping center (9/18/17)1
- Mo. conservation agents help fight fires in western U.S. (9/15/17)
IMF directed to develop new approach to world debt crises
WASHINGTON -- Finance leaders directed the International Monetary Fund on Saturday to develop a dramatic new approach to resolving debt crises that have engulfed countries from Asia to South America.
The goal is creation of a process by which nations with unmanageable debt could declare bankruptcy and force creditors to negotiate more lenient repayment terms.
The order for the 184-nation IMF came from the lending institution's policy-setting committee of finance ministers.
The step is a milestone in overhauling the global finance system. The effort has moved in fits and starts since the Asian currency crisis of 1997-98 pushed 40 percent of the world's economy into recession.
The announcement by Britain's chancellor of the exchequer, Gordon Brown, and the IMF's managing director, Horst Koehler, was likely to be the biggest achievement of this year's annual meetings of the IMF and World Bank.
Rising recovery worries
The meetings came against a backdrop of rising worries about the uncertain economic recovery from last year's recession. Chief concerns are plunging stock markets, Latin America's debt crisis and possible war in Iraq.
The finance ministers who serve as the IMF's board of directors sought to allay those fears. Treasury Secretary Paul O'Neill said "handwringers" were ignoring positive economic developments.
But efforts to project an optimistic front were undermined by mixed signals by financial officials from Japan about how Japan planned to deal with its troubled banking sector and revive the world's second largest economy.
As in the past, the meetings attracted thousands of anti-globalization protesters who contend the institutions' policies favor wealthy nations.
Authorities widened their security perimeter Saturday in downtown Washington. Only a handful of arrests were reported by nightfall Saturday, a sharp contrast to the 649 taken into custody Friday.
While critics of the two organizations complained that the wealthy nations were not putting up sufficient money to help poor countries, World Bank President James Wolfensohn rejected that view. He said the United States and European Union have pledged a combined $12 billion increase in foreign aid over the next three years, which he said would be enough to launch iniatives in a number of areas to achieve the United Nations' goals of cutting world poverty in half by 2015.
"We have jaw-jawed enough and now we must focus on implementation," said South African Finance Minister Trevor Manuel, chairman of the World Bank's policy-setting panel, who along with Wolfensohn briefed reporters at the close of Saturday's talks.
Hard work lies ahead
The bankruptcy proposal faces stiff opposition from large banks in the United States and other wealthy countries that make loans to developing countries. But O'Neill, speaking Saturday night to the Institute of International Finance, which represents the world's biggest banks, appealed to the group to help policy-makers come up with an acceptable approach to national bankruptcies.
"Everyone of you in this room must engage in this effort -- we owe that to the people who have suffered from the chaos of the current system," O'Neill said in prepared remarks.
The Bush administration originally favored a limited approach by which a majority of creditors could agree to accept lower repayments from countries in dire circumstances. A single creditor can, in most instances now, block reduced repayment terms.
A week ago, the administration indicated it supported a two-track approach that included its proposal and the more sweeping IMF plan.
Koehler said hard work lies ahead in developing the details to put the bankruptcy process into place. The IMF will listen to the concerns of banks and others creditors, he said.
The proposal will be presented to the IMF's directors in April.
The plan ultimately would require approval from each of the organization's 184 members.
O'Neill and Brown both expressed optimism that despite the current economic turmoil, the world was on track for higher growth.
"I don't find the world such a gloomy place," O'Neill said. Brown said there was a strong commitment from the world's seven wealthiest countries that "each continent has to play its part in creating conditions for faster growth."
Intruding upon that optimism was a disagreement in the Japanese delegation. Finance Minister Masajuro Shiokawa publicly rebuked his top aides Saturday for a statement that contradicted an assertion he had made the day before about his talks with O'Neill.
Shiokawa had said he held out the possibility that Japan would use government money to shore up Japan's troubled banks. The dispute left other nations wondering just what policies Japan would now pursue.
As another response to the protesters in the streets, Brown said a group of 15 rich countries would soon announce commitments to fill a $1 billion financing gap in a program that provides debt relief for the poorest nations.
That did not impress debt relief advocates. Julia Tilford, a spokeswoman for Oxfam International, said the new money was a "patch up job for what is a failing initiative" that needed fundamental reforms.