Defending the IMF. (Economics, Labor & Business)

Article excerpt

"The IMF Strikes Back" by Kenneth Rogoff, in Foreign Policy (Jan.-Feb. 2003), 1779 Massachusetts Ave., N.W., Washington, D.C. 20036.

The International Monetary Fund (IMF), which provides short-term loans to distressed member-nations, has become a favorite target of anti-globalization protesters and other critics. Rogoff, economic counselor and director of the research department at the IMF, rises to its defense.

One common criticism is that the fund imposes harsh economic policies on governments, crushing the hopes and aspirations of their people. But from Peru in 1954 to South Korea in 1997 to Argentina today, governments in developing countries have sought JMF aid because they were already in deep financial trouble. The IMF steps in where private creditors fear to go and offers loans at low interest rates. The fund doesn't create the austerity, says Rogoff, it lightens it: "The economic policy conditions that the fund attaches to its loans are in lieu of the stricter discipline that market forces would impose in the IMF's absence." Even so, he adds, politicians--including those whose economic mismanagement often helped to bring on the crisis--find in the IMF "a convenient whipping boy" when they must finally impose austerity. …


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