Washington, DC — The International Monetary Fund's policy-making panel has directed the institution to develop a "concrete proposal" that will allow heavily indebted countries to, in effect, declare bankruptcy.

The decision, adopted late Saturday, will give poor nations with deep debt additional muscle to negotiate easier terms of payment.

The announcement, by the British Chancellor of the Exchequer, Gordon Brown, endorsed the "Krueger plan for the sovereign debt restructuring." That plan, first proposed by IMF deputy managing director Anne Krueger last November, would block all creditor actions to seize assets and require the indebted country's creditors to negotiate and agree on restructuring the debt by write-downs.

"There is an imperative to shape a new deal between developed and developing countries so that all countries can share in the benefits of globalization," said Brown.

The panel, composed of 12 finance ministers from the wealthy nations and 12 from developing countries, ordered the Fund to present the plan at the panel's next meeting on April 12.

The proposal will require the approval by the IMF's 184 members. Previously, the United States has opposed the measure. Banks that make large loans to developing nations are also opposed to the idea and are expected to mount a fierce campaign to kill the proposal.

IMF Managing Director Horst Köhler said he will pay careful attention to those concerns. "The IMF in its further work will of course continue and even intensify the outreach in the dialogue with the private sector and others involved."

Debt, which has been central to much of the discussion at this week's meetings of the IMF and World Bank, is of special concern to African nations, who are burdened with US$300bn of debt, and critical of many of the conditionalities that are currently required for debt relief.