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A Letter to the Editor
By John Odling-Smee
Director of the International Monetary Fund's
European II Department
The Wall Street Journal Europe
August 24, 1999
In his eagerness to convict the International Monetary Fund of supporting both corrupt politicians and destructive economic policies in Russia, Matt Bivens plays fast and loose with the facts ("The IMF Bails Out Russia's Corrupt Politicians," Editorial page, August 17).
To take just two examples: Mr. Bivens is wrong to claim that the IMF is interested merely in high taxes. In fact the thrust of Fund advice to Russia is to strengthen the government's finances by better tax collection. Better tax collection can, in turn, create the breathing space for tax rate reductions. He is also wrong to say that the report by PricewaterhouseCoopers supports the claim that there was a large-scale misappropriation of funds. (You can read this report, together with a second, on the use of funds transferred to the central bank of Russia by the IMF in July 1998, on the IMF's website at www.imf.org.)
However, it is in his main charge, that IMF lending is irresponsible, that Mr. Bivens is widest of the mark. The fact is that IMF loans have been used for legitimate government purposes, such as helping to finance the budget deficit. They have been made in support of economic programs that addressed the basic problems of the economy and have commanded the support of the Fund's 182 country members. I would advise your readers to judge for themselves by studying the latest program on the IMF's website, rather than to accept Mr. Bivens' unreliable oversimplifications.