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Imf admits some mistakes Original Source Link: (May no longer be active)
http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1082671810976&call_pageid=968350072197&col=969048863851http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1082671810976&call_pageid=968350072197&col=969048863851
Apr. 23, 2004. 01:00 AM
IMF sees the error of some of its ways
Economic policies can be too austere
Self-assessment called `sobering'
MALCOLM FOSTER
ASSOCIATED PRESS
NEW YORK — For years, critics have accused the International Monetary Fund of being a secretive institution that imposes overly austere policies on developing countries and refuses to admit mistakes.
The IMF has brushed away such attacks in the past, but is now showing signs of becoming more self-critical.
It conceded last month that it missed warning signs of Argentina's financial crisis of 2001, saying in a report that said it was too optimistic about the country's growth prospects and the success of reforms it had urged.
A year earlier, the IMF published a research paper concluding that in developing countries, rapid financial market liberalization — a long-standing condition for IMF loans — sometimes leads to further instability, not economic growth. It called the results ``sobering.''
The terms the IMF set for bail-out loans used to be kept secret. Now they are usually made public. "The fund has learned that in order to do business, it needs to do it openly and transparently. It needs to listen to its critics, learn from them and engage in self-criticism," said spokesperson Thomas Dawson.
"That doesn't always mean the critics are right."
Still, the IMF concedes that its loan terms in the Asian crisis were too austere. Thailand, Indonesia and South Korea, unable to repay foreign debts after a plunge in their currencies, were required to hike interest rates, cut public spending and liberalize financial markets.
Argentina's financial debacle, defaulting on $80 billion of foreign debt, was particularly embarrassing for the IMF because it had been closely advising the country and had held it up as a model. The crisis pushed nearly half the population into poverty and sparked deadly riots.
In its paper examining Argentina, the IMF's executive board said the fund failed to sound the alarm on a host of issues, particularly the country's "excessive" borrowing and the peso's peg to the dollar.
Critics welcome such moves, but say they don't go far enough.
"It's still halfhearted," said Joseph Stiglitz, Nobel Economics Prize winner and a former chief economist at the World Bank, the IMF's sister institution. "They're not self-critical enough to say maybe our model is wrong.''
Plus, so far there's no sign that the IMF is actually changing in its policies, opponents say.
"They're doing a more honest reckoning of what they have wrought, but their policies haven't changed," said Soren Ambrose, policy analyst with 50 Years is Enough, one of several groups planning protests this weekend during the IMF's spring meeting in Washington.
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