WASHINGTON. June 5: The head of the International Monetary Fund yesterday urged debtors and creditors to work together when crisis looms, but said debtors should not use IMF cash to ball out the private sector. says Reuters.

IMF Managing Director Michel Camdessus, speaking to the Council on Foreign Relations in New York, said loan contracts had to be honoured, although troubled countries might at times find it hard to pay their debts.

"In such cases it will be important to. ensure that public money is not used to shield private creditors from adverse outcomes," he said, according to a text released in Washington. "The debtor country must be able to meet with its private creditors to discuss continued public sector involvement."

Camdessus also repeated IMF pleas for new clauses in new bond contracts to prevent individual bondholders from blocking much-needed rescheduling deals. "Rescheduling could then take place with the consent of a majority of creditors, rather than requiring unanimous assent as at present," he said.

The IMF put together rescue packages worth tens of billions of dollars in Asia. Russia and Latin America.

It has long been trying to find ways to ensure that the private sector shares some of the costs of these rescue deals and it wants to ensure debtor nations like Ukraine. Pakistan

or Romania do not use IMF money to repay private sector debts.

Camdessus said borrowers and official lenders, including the IMF, had already introduced changes designed to ease the chance of new financial crises. Countries and lenders were drawing up new standards and making more information available, and it was time for the private sector to play a role.

"Just as the public sector is being asked to adapt its crisis, so too the private sector ... will need to change," he said. This will mean an increase in its own transparency and governance ... developing more effective evaluation and management of risk."

The world financial crisis, which started in Thailand almost two years ago. stretched IMF resources to the limit, although funding problems eased after member countries approved a cash injection late in 1998.

Camdessus said the IMF still needed money to pay for a debt relief programme and for concessionary loans to poor countries. He hoped IMF members would soon complete a deal to sell some gold from IMF reserves.

Most major IMF member countries favour sales of up to 10 million ounces from the IMF's 103 million ounce gold stockpile. The money would be put in a trust fund and interest earned on this cash would be used to pay for the two programmes.