US: WB and IMF process should be completely transparent and accountable

U.S. Treasury Secretary John Snow says that the International Monetary Fund (IMF) and World Bank have "crucial" roles to play in providing humanitarian relief to Iraq and "laying the groundwork" for that country's reconstruction.

In an April 12 statement before the International Monetary and Financial Committee -- the policy-setting body of the Fund -- Snow said it is critical that the IMF conduct an assessment of the macroeconomic situation in the country and help it establish the basis for growth.

On another issue, Snow called on the IMF to move forward with a voluntary approach to sovereign debt restructuring to achieve a more orderly and predictable mechanism for countries in financial distress.

He said the IMF should accept a policy of including collective action clauses in bond contracts, which would limit the ability of dissident creditors to block a widely supported restructuring on an individual bond issue.

Snow said that "it is neither necessary nor feasible" to continue working on a statutory approach, which would allow a qualified majority of a country's creditors to approve a restructuring agreement binding on all. A plan advanced by IMF Deputy Managing Director Anne Kruger would require IMF members to change the organization's statute.

To enhance crisis prevention, Snow said, the IMF needs to provide better information to the public by making results of its analyses widely available. And in order to be a "credible and useful" guide for decision-makers, its advice must be "comprehensive, transparent, and accountable -- and as objective and clear as possible."

Snow also called on the most developed countries to take "appropriate" action to strengthen the economic recovery.

He reaffirmed the U.S. position that the most effective way to help low income countries is to focus on results and promote good governance as well as sound economic and social policies.