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IMF Prescribing Bad Medicine for Asian Economies

Some international economists charge that the International Monetary Fund is giving the wrong sort of advice to Southeast Asian countries. They say the IMF and the United States are telling countries in the region to slow their growth, weaken their currencies and raise taxes.

Critics say such advice is directly counter to policies being pursued in the U.S.

Here are a few of their arguments:

  • A country's competitiveness -- its ability to grow, prosper and innovate -- declines when its currency weakens, as capital flees the region.

  • Stronger, less volatile exchange rates attract capital inflows -- as has been demonstrated throughout Latin America.

  • The longer Southeast Asian countries wait to assure markets that long-term currency stability is one of their core goals, the longer interest rates will be higher than they need be, investments will be delayed and per capita income depressed.

Critics of the IMF say the West is winning at the expense of sharply slowing growth rates in much of Asia. They advise leaders in Southeast Asian countries to quickly reject most U.S. and IMF economic advice.

Source: David Maples (Bear Sterns & Co.), "Break the IMF Shackles," Wall Street Journal, September 26, 1997.

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