December 19, 2001
| Public Affairs | Media Relations | |||
|---|---|---|---|---|
| E-mail: | publicaffairs@imf.org | E-mail: | media@imf.org | |
| Fax: | 202-623-6278 | Phone: | 202-623-7100 | |
| Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case. |
On August 23, 2001, the Executive Board of the International Monetary Fund (IMF) had preliminary and informal discussions on a staff paper that reviewed the treatment of the claims of private sector and Paris Club creditors.
Background
The Executive Board has held continuing and informal discussions on a range of issues related to the resolution of financial crises and the role of the private sector. The Board had requested staff to prepare a paper ("Involving the Private Sector in the Resolution of Financial Crises-The Treatment of Claims of Private Sector and Paris Club Creditors-Preliminary Considerations") that considered issues relating to comparability of treatment between Paris Club and private sector claims in the exceptional cases in which a rescheduling by Paris Club and other official bilateral creditors is required. Agreements between Paris Club creditors and debtor countries include a clause under which the debtor agrees to seek at least comparable terms obtained in the Paris Club rescheduling from other non-multilateral creditors, and not to grant such creditors a treatment more favorable than given to Paris Club creditors. The paper placed the discussion of comparability in the broader context of the involvement of the private sector in the resolution of financial crises, and the Prague Framework, which was endorsed by the IMF's International Monetary and Financial Committee at its September 2000 meeting.
Executive Board Assessment
Following the Executive Board's discussion, the Acting Chair, stated:
"Directors felt that many of the questions raised by the paper were beyond the Board's technical expertise and mandate, but that the staff paper nevertheless provided a useful background to help advance the discussions between the staff and the Paris Club and between the Paris Club and the private sector on ways to address comparability of treatment and private sector involvement.
"Directors saw merit in providing greater clarity with regard to the application of the principle of comparable treatment within the Paris Club so as to improve market confidence by reducing uncertainty, while at the same time retaining a flexible case-by-case approach.
"Directors urged continued cooperation and information sharing between the Fund and the Paris Club to ensure that questions of private sector involvement, comparability, and medium-term sustainability are addressed effectively in the design of programs and in Paris Club rescheduling agreements.
"Although Directors generally did not consider the use of the catalytic approach for Paris Club reschedulings as appropriate, they confirmed the need for flexibility in requiring comparable treatment of private sector debt, including in cases where private debt restructuring could affect future market access.
"Directors supported the recent efforts of the Paris Club to improve the transparency of its policies and practices, and, in this regard, welcomed the creation of the Paris Club website and the intensification of contacts with the private sector.
"Directors broadly agreed that the "as if" approach to debt rescheduling by the Paris Club was not feasible, as it would imply either the private sector providing relief without the assurance that the Paris Club would follow, or the Paris Club prematurely committing itself to future reschedulings.
"Directors did not support the use of reverse comparability, because Paris Club policies generally limit debt reduction to low-income countries, and relief provided through the Paris Club is just one of a number of channels through which support is provided to countries."
