IMF bashing is fun and all, but since there isn't much to say in its defence, what comes of it? The movers and shakers aren't likely to change their philosophies any time soon, so what do we do with what is essentially an exploitative multilateral organization on our hands.Heck, even the World Bank stepped back from the neo-liberal precipice.

Why does the WTO get to hog all the outrage?

It isn't only Stiglitz who critisizes the IMF in this way, but he's certainly the most visible.

He raises an interesting point however, about the unrealistic expectations of the IMF on developing countries. Is it really ok to ask a country to slash social programs as quickly as possible, and reward them for doing so, when such a thing would cause a tremendous uproar in any Western/Northern nation?

How is the IMF accountable to anyone? How is it relevant as a forefront financial institution since the abolishion of fixed exchange? I don't think it is on either counts.

Cougyr, I'm not familiar with these multinationals you mention. Care to elaborate?

[ 19 February 2004: Message edited by: Puetski Murder ]

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Having created an accident waiting to happen one might expect the IMF to at least play the role of fireman when fire broke out. But instead of throwing water, the IMF insisted on throwing kerosene on East Asia’s fires. And instead of taking the blame, the IMF insisted on blaming the victim. As conditions for receiving IMF bail out loans – which in reality bail out international investors not crisis-plagued countries – the IMF insisted on further liberalization of ownership, investment, and trade, draconian budget cuts, tax increases for the middle class, tight monetary policy pushing interest rates through the ceiling, and shut downs followed by fire-sales to foreign banks for troubled financial systems.

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The IMF strikes back (Quote: "IMF economists are not evil, nor are they invariably wrong").

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The IMF over the past few years has worked as the advance guard of the WTO. In December 1997, the IMF's bailout program for South Korea included the following, very revealing, statement: 'Timetables will be set, in compliance with WTO commitments, at the time of the first review, to eliminate the import subsidies; eliminate restrictive import licensing; eliminate the import diversification programme; and streamline and improve the transparency of the import certification procedures.' The Indonesia bailout package speaks of 'liberalization of foreign trade and investment' as a condition for the IMF secured monies.

The push to insert conditions such as 'freer' markets and trade indicates an interest by the IMF to open access for transnational corporations to financial markets. But it also indicates that the IMF is operating outside its previous structural adjustment framework in order, perhaps, to do the advance work for the WTO. James Tobin, at Yale, for instance, notes that 'it is hard to escape the conclusion that the countries' currency distress is serving as an opportunity for an unrelated agenda -- such as the obtaining of trade concessions for US corporations and expansion of foreign investment possibilities.'

Why are private sector firms interested in investing in what the UN calls the Least Developed Countries (LDCs)? Are they interested in the development of these countries, in the well being of the people of these regions? Or do they require these regions to turn a profit on their financial holdings? For several years, interest rates in the advanced industrial countries have been rather low when compared to the rates of return in the LDCs. Institutionalization of savings and increase in the investor base (through mutual and pension funds) creates a larger fund of money that needs to turn a profit. As the LDCs, under pressure from the IMF and many of their corrupt governments, liberalize their financial markets, these become a haven for the speculator.

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However one apportions blame for the financial crises of the past two decades, misconceptions regarding the merits and drawbacks of capital-market liberalization abound. First, it is simply wrong to conclude that countries with closed capital markets are better equipped to weather stormy financial markets. Yes, the relatively closed Chinese and Indian economies did not catch the Asian flu, or at least not a particularly bad case. But neither did Australia nor New Zealand, two countries that boast extremely open capital markets. Why? Because the latter countries' highly developed domestic financial markets were extremely well regulated. The biggest danger lurks in the middle, namely for those economies—many of which are in East Asia and Latin America—that combine weak and underdeveloped financial markets with poor regulation.

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