Anne Krueger, the IMF's recently installed first deputy
managing director, provoked consternation when she addressed the
National Economists Club annual dinner in Washington in November.
Krueger used the occasion to propose new protections for countries
that halt payment on their outstanding debt. Complaining that a
"gaping hole" remained in the international financial system, she
said: "We lack incentives to help countries with unsustainable
debts resolve them promptly and in an orderly way."
Until recently IMF officials reacted cooly to similar ideas from
such people as Harvard's Jeffrey Sachs and Barry Eichengreen of the
University of California at Berkeley. But the approach is getting a
different reception now. "The big change here," observes Princeton
University's Peter Kenen, "is a very clear signal that the IMF
isn't going to bail anybody out."
Krueger's speech came just a month before the unrest in Argentina
flared. "Argentina has exposed a significant weakness...
