IMF Debt monitoring tool needs no big changes

Washington, Jun 3: The International Monetary Fund said its board does not think big changes are needed to a framework used to monitor a poor country's ability to service its debt, despite massive debt relief agreed for several nations this year.

''Directors agreed that the DSF (debt sustainability framework) remains broadly appropriate and that no major changes are warranted at this stage,'' the lender said yesterday.

The tool, endorsed by the IMF and World Bank boards in April 2005, sets out a number of thresholds and guidelines to keep poor countries from taking on crippling debt burdens.

It has led to numerous joint debt sustainability studies by the two lenders, including a joint staff paper examining how a debt relief plan implemented for 19 countries in January 2006 affected the framework.

Under that plan, called the Multilateral Debt Relief Initiative (MDRI), those 19 countries will receive relief from the IMF, World Bank and the African Development Bank.

The IMF said its board was encouraged by the framework's first year and said it has become an effective tool.

Still, the directors saw room to make it more useful.

The directors, after considering the effects of lowering or raising the DSF debt thresholds in light of debt relief plans, agreed to stick to the status quo.

REUTERS