International -- Editorials
IS IT TIME TO REASSESS THE IMF? (int'l edition)
It's time to have a full review of the International Monetary Fund. Not the kind of IMF bashing that passes for review in Washington, where Senate Majority Leader Trent Lott (R-Miss.) calls the organization's head, Michel Camdessus, a French socialist and then heads for lunch. What's needed is a real top-to-bottom evaluation of the agency and what it stands for in today's sophisticated financial world. Does it do its primary job of lending well? Has it outlived its purpose? Can its role be filled by a much smaller, leaner, more responsive agency? Would it be better to let markets make all the decisions and close the IMF's doors?
The IMF today has ranged far from its original mandate, which was to lend short-term funds for balance-of-payments crises. In Asia, it is writing rules for reforming whole economies, governments, and cultures. As a lender of public money, it has a responsibility to make sure the money gets used effectively and doesn't wind up in Swiss bank accounts. But no one knows how well it is doing on this score, or whether any of its longer-term programs make economic sense.
The IMF is also supposed to sound an early warning to prevent financial crises like the Asian catastrophe. Instead, the 1,000 economists on its staff were thumping the tub for the Asian development model just months before the whole region came crashing down. Here, the IMF's accountability is clear. It failed as spectacularly as the U.S. Central Intelligence Agency did in missing the collapse of the Soviet empire. The IMF is now pretending to assess itself by leaking self-serving reviews of its performance to the press. That's the wrong approach. The U.S. Treasury, the IMF's largest contributor, should lead a full investigation of the institution's performance. Congress should insist on an independent review before it approves any new funding.