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Surveillance and Crisis Prevention – Better information is key to sound economic analysis and improved pricing of risk, with a view to promoting more stable capital flows. In this regard, the IMF has made progress in deepening its surveillance capacity, including through the development of more robust debt sustainability analyses and greater focus on national balance sheets. The IMF and its Independent Evaluation Office (IEO) have identified areas for further progress to make surveillance more comprehensive, independent and accountable, including a fresh perspective in program countries and improved analysis of vulnerabilities. We urge the Fund to intensify its work in these and other critical areas, including currency mismatches, reporting progress to the 2003 Annual Meetings. To complement these measures, we support the presumption of publication of Article IV reports, Public Information Notices (PINs) of relevant Board discussions, program documents, and reports on the observance of standards and codes (ROSCs), especially for countries with IMF programs, while taking into account its impact on deletion and correction policy. Program documents for cases of exceptional access should always be published.
Access Limits - Consistent with the need for greater discipline in the provision of official finance in crisis situations, we support the IMF Board’s decision that normal access should be limited to 100 per cent of quota in any one year and a cumulative total of 300 per cent of quota. Lending under any facility, or combination of facilities, above these limits will be considered exceptional. Over the past year, the IMF has set out criteria and procedures to inform decisions and judgements for cases where exceptional access is contemplated. These stronger procedures, including early Board involvement and a separate report evaluating the case for exceptional lending, will be applied to any exceptional lending, even where the member is not experiencing a capital account crisis. We welcome the recent establishment of a strong presumption that only the SRF will be used for any exceptional lending to address significant balance of payment pressures on the capital account. We also welcome the progress made in clarifying the Fund’s policy for lending in cases where members are in arrears to their private creditors.
Code of Conduct – In the light of growing interest in exploring a voluntary “code of good conduct”, and since good investor relations are key to timely, orderly debt restructurings, we have instructed our officials to prepare a report, in consultation with issuers and the private sector, on these issues by our Fall meeting. We note that the Fund has already started to examine the concept and we look forward to a progress report on its work.
Collective Action Clauses (CACs) – We remain committed to promoting the early and widespread adoption of CACs. To date, experts from the private and official sector have made progress toward developing model clauses for use in sovereign bond contracts. We expect that G-7 countries will continue their leadership by adopting CACs in their own bonds governed by the laws of a foreign jurisdiction. Consistent with the policy of the European Union to introduce these clauses in new foreign bond issues, some EU members will start issuing bonds with such clauses this year. We welcome the leadership that Mexico has shown by including CACs in its successful bond issues under New York law.
Sovereign Debt Restructuring Mechanism (SDRM) – The extensive analysis and consultations undertaken in the course of the Fund’s development of a concrete SDRM proposal have promoted a better understanding of the issues to be addressed in the more orderly resolution of sovereign debt crises. In view of the experience gained through the implementation of CACs and the interest in a code of conduct, and recognizing that it is not feasible now to implement the SDRM proposal, work should continue on issues raised in the SDRM discussions, such as aggregation, scope of debt, and inter-creditor equity that are of general relevance to the orderly resolution of financial crises.