Panel Flails World Bank And I.M.F
March 8, 2000
In 1998, Congress created the International Financial Institutions Advisory Commission to advise it on the kinds of changes needed at the World Bank and the International Monetary Fund. It is releasing a report today which calls for deep reforms, radical downsizing of the two institutions, and charges that they waste billions of dollars.
Congress created the commission as a condition of its approving a further $18 billion contribution to the I.M.F. two years ago. The 11-member bipartisan panel of scholars approved the report by eight to three -- a vote which was largely along political lines.
- The report charged that the World Bank and the I.M.F. waste billions by making loans to middle-income countries that could very well qualify for private capital instead.
- The institutions should sharply curtail their lending programs, and they often intervene too much in the domestic policy and even politics of countries they seek to help -- and they generally fail to lead nations out of poverty.
- The I.M.F. should extend emergency, short-term loans to countries in balance-of-payments difficulty, and get out of the long-term credit business.
- Countries seeking I.M.F. credit would have to qualify in advance -- over a five-year period -- basically through financial sector reforms.
A main thrust of the report is to take the important activities of the I.M.F. and the development banks out of politics. Critics of multilateral lenders say they have been useful politically for years. The U.S. -- because of its large contributions to these agencies -- has had a powerful influence over their decisions.
Sources: Editorial, "Lender of Gasp Resort," and Allan Meltzer and Jeffrey D. Sachs (International Financial Institutions Advisory Commission), "A Blueprint for IMF Reform," Wall Street Journal; Joseph Kahn, "Report Sees Big Changes in I.M.F. and World Bank," New York Times, all March 8, 2000.
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