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IMF warning - US think tank says most countries worse off after IMF agreement
Published: Tuesday | October 6, 2009
Arthur Hall, Senior Staff Reporter
Weeks before Jamaica completes its application for a US$1.2-billion standby agreement with the International Monetary Fund (IMF), a United States think tank has issued a dire warning about the latest impact of the fund on developing countries.
While making no direct reference to Jamaica's negotiations with the fund, the Centre for Economic and Policy Research (CEPR) yesterday released a discussion paper in which it argues that 31 of 41 of countries with current IMF agreements have been subjected to harmful monetary and fiscal policies.
That has been a fear of many Jamaicans since the Government announced plans to resume a borrowing relationship with the IMF.
However, Prime Minister Bruce Golding and Finance Minister Audley Shaw have sought to allay the fears by arguing that the IMF has changed since its 'one size fits all' stance of the 1970s and 1980s.
Golding and Shaw have further argued that the IMF no longer 'prescribes the pills' but allows countries to develop their 'individual prescriptions' to cure their ills.
However, that view is not shared by the CEPR which claims that recent IMF prescriptions have exacerbated economic slowdowns in some countries.
"More than a decade after the Asian Economic Crisis brought world attention to major IMF policy mistakes, the IMF is still making similar mistakes in many countries," CEPR co-director and lead author of the discussion paper, Mark Weisbrot, said.
Overly optimistic forecasts
"The IMF supports fiscal stimulus and expansionary policies in the rich countries, but has a much different attitude towards low- and middle-income countries," Weisbrot said.
Yesterday, CEPR said that while it could not comment directly on the Jamaican situation, it has found that in some cases the IMF has relied on overly optimistic growth forecasts - significantly underestimating the impact of the world recession on borrowing countries.
"Quite often, the negotiations aren't as transparent as they could be, so I'm not too familiar with what the IMF is putting on the table for Jamaica or what it is saying publicly," Dan Beeton, information officer at CEPR, told The Gleaner.
Beeton also scoffed at claims of a new-look IMF.
Shaw to return
"Really, it is more of the same old IMF. It is time for the fund to re-examine the criteria, assumptions and economic analysis that it uses to prescribe macroeconomic policies in developing countries," added Beeton.
The CEPR paper comes at a time when Shaw and other finance ministers from the more than 170 IMF member countries are meeting in Istanbul, Turkey, for the IMF/World Bank annual general meeting.
Shaw is slated to return to the island this week to complete the preparation of the medium-term macroeconomic framework which will form the basis of Jamaica's request for the standby agreement.
Jamaica's letter of intent should be with the fund before the end of this month with an agreement expected to be in place by November. arthur.hall@gleanerjm.com
IMF warning - US think tank says most countries worse off after IMF agreement
Published: Tuesday | October 6, 2009
Arthur Hall, Senior Staff Reporter
Weeks before Jamaica completes its application for a US$1.2-billion standby agreement with the International Monetary Fund (IMF), a United States think tank has issued a dire warning about the latest impact of the fund on developing countries.
While making no direct reference to Jamaica's negotiations with the fund, the Centre for Economic and Policy Research (CEPR) yesterday released a discussion paper in which it argues that 31 of 41 of countries with current IMF agreements have been subjected to harmful monetary and fiscal policies.
That has been a fear of many Jamaicans since the Government announced plans to resume a borrowing relationship with the IMF.
However, Prime Minister Bruce Golding and Finance Minister Audley Shaw have sought to allay the fears by arguing that the IMF has changed since its 'one size fits all' stance of the 1970s and 1980s.
Golding and Shaw have further argued that the IMF no longer 'prescribes the pills' but allows countries to develop their 'individual prescriptions' to cure their ills.
However, that view is not shared by the CEPR which claims that recent IMF prescriptions have exacerbated economic slowdowns in some countries.
"More than a decade after the Asian Economic Crisis brought world attention to major IMF policy mistakes, the IMF is still making similar mistakes in many countries," CEPR co-director and lead author of the discussion paper, Mark Weisbrot, said.
Overly optimistic forecasts
"The IMF supports fiscal stimulus and expansionary policies in the rich countries, but has a much different attitude towards low- and middle-income countries," Weisbrot said.
Yesterday, CEPR said that while it could not comment directly on the Jamaican situation, it has found that in some cases the IMF has relied on overly optimistic growth forecasts - significantly underestimating the impact of the world recession on borrowing countries.
"Quite often, the negotiations aren't as transparent as they could be, so I'm not too familiar with what the IMF is putting on the table for Jamaica or what it is saying publicly," Dan Beeton, information officer at CEPR, told The Gleaner.
Beeton also scoffed at claims of a new-look IMF.
Shaw to return
"Really, it is more of the same old IMF. It is time for the fund to re-examine the criteria, assumptions and economic analysis that it uses to prescribe macroeconomic policies in developing countries," added Beeton.
The CEPR paper comes at a time when Shaw and other finance ministers from the more than 170 IMF member countries are meeting in Istanbul, Turkey, for the IMF/World Bank annual general meeting.
Shaw is slated to return to the island this week to complete the preparation of the medium-term macroeconomic framework which will form the basis of Jamaica's request for the standby agreement.
Jamaica's letter of intent should be with the fund before the end of this month with an agreement expected to be in place by November. arthur.hall@gleanerjm.com
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