Tuesday, October 7, 2014

Even the IMF thinks Vulture Funds are a problem

Since I criticized recently the IMF on its timid changes on macroeconomic policy advice, and the persistence of austerity based programs, it is worthwhile noticing that on the question of debt restructuring they have come clearly on the side limiting the power of Vulture Funds. In a new report on Sovereign Debt Restructurings the IMF suggests that:
The recent litigation involving Argentina has generated significant concerns regarding the impact that the New York court decisions may have on the overall restructuring process. In light of these concerns, there has been considerable progress in both the design and use of a modified pari passu clause that explicitly excludes the obligation to pay creditors on a ratable basis. It is recommended that the Fund support the widespread use of such a modified pari passu clause in international sovereign bonds.
Note that this might have an impact on future debt renegotiations, but is of little help for Argentina right now. But if the IMF is doing this, it means that the US Treasury is not particularly happy with judge Griesa's decisions.

PS: Here and here two parts of an interview for the radio program Debates Económicos of the Universidad Nacional de Colombia (in Spanish). 

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