Reflecting the historically cozy relationship between the Treasury Department and the IMF, O'Neill has left the fund to plan its own reforms. It has begun to seek ways to help bankrupt countries without resorting to expensive bailouts, which critics like Stiglitz say were meant primarily to allow wealthy investors to recover their money. As a substitute for bailouts, the fund has proposed a tribunal for restructuring the debts of insolvent countries.
Last November, Anne Krueger, the first deputy director of the IMF, suggested that the fund could sponsor a bankruptcy procedure for countries in crisis. In such a system, claims would be frozen and the fund would provide interim aid and help work out who will be repaid and how. Investors cried foul, arguing that the fund could not supply money to a country and, as a creditor itself, decide who ought to be repaid. The fund is revising its proposal.
Few people expect the meeting in Monterrey to generate new aid pledges or innovative development strategies. But the dialogue could speed the process. Neither the World Bank nor the IMF is close to completing its mission. More than a billion people still live on less than US$1 a day, and crises strike developing countries with alarming frequency. "This," Stern said, "is a long haul."
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