Abstract
Mark Allen, a U.K. national, took over the reins as Director of the IMF’s Policy Development and Review (PDR) Department in December 2003. After joining the IMF in 1974, he gained experience with member countries worldwide, serving chiefly in PDR (and its earlier incarnations), but also doing stints in the African Department and as Senior Resident Representative in Poland and Hungary. Laura Wallace spoke with him about the IMF’s efforts to inject more stability into the global economy by better staving off financial crises and resolving those that do occur more quickly and less painfully.
As for crises where there needs to be a speedy resolution of debt difficulties with creditors, we’ve made some progress in the area of collective action clauses. These clauses are now being used more widely. The debate on the Sovereign Debt Restructuring Mechanism [SDRM] has been shelved for the time being. We’ll have to see, as we gain more experience—and obviously Argentina’s negotiations with its creditors are going to be a key source of experience—what more needs to be done.
A speedy agreement with creditors is very helpful to the country, and I see no reason for reversing that judgment yet. What we’re seeing in Argentina, as time moves on, is more litigation of one sort or another. This split in the creditor community may not bode well for a speedy and comprehensive resolution of that country’s debt problems.
IMF Survey: In recent years, there has been a proliferation of initiatives aimed at helping low-income countries—a rethought concessional loan facility, poverty reduction strategy papers [PRSPs], enhanced debt relief for the heavily indebted poor countries, post-conflict strategies, and, now, a new debt sustainability framework. Do these add up to a coherent role for the IMF in low-income countries?
The IMF also has a financing role, but not to finance development itself. Rather, it’s to help countries get through difficult periods, especially outside shocks—thereby saving the country from being forced into an adjustment that may very well worsen poverty and retard development. At the same time, however, we have to recognize that these countries—especially the poorest of them—have very limited capacity to service debt. While the IMF has concessional resources, they cannot be made sufficiently concessional for these most fragile countries. Rather, these countries need to mobilize other forms of financing, particularly grants.
Following the upcoming spring meetings, we plan to discuss the role that precautionary arrangements can play in preventing capital account crises and the access that is required for this insurance to be meaningful. In other words, we’ll be looking for a successor to the recently ended Contingent Credit Line Facility. The third is to help create the conditions for development and achieving the Millennium Development Goals, which requires close integration with donor countries in supporting the PRSP process.