Private sector burden sharing would stop the capital flight by bringing foreign creditors, the debtor country and the IMF together to work out a rescheduling, probably with a standfast arrangement to hold things together while negotiations take place. Thus, the burden would be shared more evenly, and the pressures on exchange rates could be reduced.
Another way in which crises can be handled better is illustrated by the recent IMF package for Brazil. It was an improvement on the Asian packages in two respects. First, the conditions were agreed on in advance in behind-the-scenes negotiations between the IMF and Brazilian authorities.