Blog, November 23, 2010
By Jason Walsh
Many people look forward to the IMF’s promise of rational economic policies. How long will this last, given the IMF’s mixed track record?
Back in June of this year, Dean Baker of the Centre for Economic and Policy Research (CEPR) wrote in the Guardian that the IMF “is distinguished not only by its dismal track record in pushing economic policies that don’t work; it also is known for the exorbitant benefits that it gives its economists.
Baker believes that the IMF’s aid packages rarely work and its economists retire young on bankers’ salaries. “When it comes to economic advice, I think I’d rather listen to that honest street drunk.”
Scary stuff given that the IMF has come into Ireland, along with the EU, precisely because Ireland’s own elites have been found wanting.
The CEPR, where Baker works, is a left-of-centre organisation, but critics of the IMF come from across the political spectrum. On the right, an article in the conservative US magazine, the National Review slammed the transnational body as far back as 1998.
“Over the past two decades, the International Monetary Fund has promised cheap loans to foreign governments in order to bribe them into pursuing suicidal economic policies designed by IMF technocrats, rather than by their own elected representatives. This costly global meddling was supposed to make the world economy a safer, more stable place.
“Needless to say, it has not. Yet international crises that the IMF neither foresaw nor forestalled have been used to persuade Congress to send the IMF another $18 billion,” wrote Alan Reynolds.
The causes of currency flight, sovereign defaults, and kleptocracy are complex. But when these disasters have befallen countries, the the IMF has often been on the premises.
– While under IMF management, Argentinian unemployment exploded to 20 percent and all bank accounts were frozen in 2002 due to a currency crisis.
– In March 2003 the IMF admitted its policies were hobbling developing world economies. “The process of capital account liberalisation appears to have been accompanied in some cases by increased vulnerability to crises,” the IMF stated in a report.
– In 1998 the IMF went into Brazil with a $41 billion (€30.39 billion) loan program intended to be a preventative measure. The result? Immediate capital flight of $20 billion (€14.71 billion).
– In 1996 the IMF approved stand-by credit for Venezuela. By 1998, interest rates had doubled to 68 percent.
– Then there was the kleptocracy that was Yeltsin’s Russia. The BBC dubbed Russia ‘the ‘IMF’s biggest failure.’