International Financial Crises and
• reject additional funding requests for the International Monetary Fund; • close down the Exchange Stabilization Fund at the U.S. Department of the Treasury; • avoid giving the IMF new missions, including that of overseeing sovereign debt restructuring or becoming a bankruptcy court for countries; and • withdraw the United States from the IMF.
Since the $30 billion bailout of Mexico in 1995, national-currency and financial crises in developing countries have increased, as has the incidence of IMF-led bailout packages. Since 1997 those packages have totaled some $280 billion for Latin America, Asia, Russia, and Turkey. Many of those bailouts and the turmoil in international financial markets resulted in the United States contributing $18 billion to massively increase the IMF's resources in 1998. U.S. Treasury officials disingenuously claimed it did not cost U.S. taxpayers a dime, but Cato Institute chairman William Niskanen put the U.S. relationship with the IMF more accurately: “U.S. government membership in the IMF is like being a limited partner in a financial firm that makes high-risk loans, pays dividends at a rate lower than that on Treasury bills, and makes large periodic cash calls for additional funds.”
But the monetary costs of supporting the IMF were not the most important reasons to have opposed more funding. The costs to the global economy are high, and the people who are most directly affected by IMF interventions—the world's poor—are those who can least afford it. If the goal is to help developing countries progress economically and to promote
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Publication information: Book title: Cato Handbook for Congress:Policy Recommendations for the 108th Congress. Contributors: Edward H. Crane - Editor, David Boaz - Editor. Publisher: Cato Institute. Place of publication: Washington, DC. Publication year: 2003. Page number: 643.
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