IMF Well-equipped to Tackle Crises

A letter to the editor
By Thomas C. Dawson
Director, External Relations Department
IMF

The Straits Times
March 21, 2001

Your editorial, 'IMF needs bail-out' (ST, March 15), was seriously flawed when it dismissed the IMF record in East Asia, Russia and Mexico in the second half of the 1990s as one of 'failures'.

When this region plunged into crisis in 1997, everyone was caught by surprise and some initial policy mistakes were made, including by the IMF.

But the rapid rebound in 1999, especially in Korea, shows that the responses were basically sound. Any faltering in performance now is due largely to incomplete economic reforms and worries about the economic outlook in other parts of the world.

Your report also missed the mark on Turkey, which it cited as an instance of the IMF not following through on its 'rhetoric' of ownership. In fact, Turkey has been calling the shots from day one.

The Turkish government undertook its own economic reform programme, with IMF support, after coming to power in mid-1999 - a programme focused on financial reform and controlling inflation.

That effort met with considerable success.

When the programme began to run into problems last November, it was Turkey, not anyone else, that dictated the next steps.

In addition, your editorial's characterisation of fund staff as 'homogenous' - and thus giving voice to only a single point of view - could not be further from the truth.

Our 2,500 staff come from 133 different countries because we prize diversity in national origin and culture. Among the professional (chiefly economist) staff, about 40 per cent come from non-industrial economies, and 15 per cent come from Asia.

Your report disparaged 'academic prestige', but surely we should hire only the best and the brightest in such challenging times.

As for its call for IMF reform, the high-level meetings that will take place in Washington in late April will review progress on this very issue.

Our shareholders - our 183 member countries - will discuss the latest in a long series of changes underway to make the IMF better equipped than ever to help prevent financial crises, and tackle those that do break out.

Detailed information on the IMF reform process is available on the fund's website (www.imf.org).