IMF admits its policies seldom work

Telegraph [UK] ^ | 3/19/03 | Simon English in New York

[Mark Felton]

The International Monetary Fund, the Washington-based bank set up to police the financial globe and assist the Third World, yesterday made the startling admission that the policies it has been pursuing for the last 60 years do not often work.

In a paper that will be seized on by IMF critics across the political spectrum, leading officials reveal they can find little evidence of their own success.

Countries that follow IMF suggestions often suffer a "collapse in growth rates and significant financial crises", with open currency markets merely serving to "amplify the effects of various shocks".

Kenneth Rogoff, the IMF chief economist who is one of the report's authors, called the findings "sobering".

A recent study by the United Nations reported that the 47 poorest countries in the world - the biggest recipients of loans from the IMF and the World Bank - are poorer now than they were when the IMF was founded in 1944.

The IMF has been on the back foot since former World Bank chief economist Joseph Stiglitz, a Nobel prize winner, started publicly attacking the organisation two years ago. Detractors claim that last year's $30 billion bail-out of Brazil was the final chance for its lending policy to succeed.

Loans in the last few years to Thailand, Indonesia, Korea, Russia and Argentina are widely regarded as having little positive effect. Activists in Bolivia last month blamed an IMF inspired tax increase for rioting that led to at least 20 deaths.

At the start of the 1990s, market reformers proclaimed a "decade of hope" as free trade grew and poor nations opened up to investment from abroad.

The report says that "financial integration" has often led to an "increased vulnerability to crises" because foreign speculators pull out as soon as trouble emerges.

A spokesman said the report should not been seen as an admission that the IMF itself had failed, but admitted it was considering an overhaul of its practices.

He said: "There hasn't been overwhelming evidence for the benefits of globalisation. We are not the only perpetrators of this - we are not ground zero for globalisation. This is an economic analysis; it is not institution specific."

[Mark Felton]

IMF has done expanded bankruptcy and poverty in the 3rd world. It has done so while making the elite few 3rd world despots fabulously wealthy.

IMF = Corruption, destruction and using US taxpayer dollars

[ChemistCat]

90% of doing a good job is noticing that you are doing a bad job and changing how you do it. 60 years is a long time to decide to do that.

If they hired Thomas Sowell, or Walter Williams, to be in charge, I suspect a great deal of suffering worldwide could be alleviated.