Refocusing the IMF

Abstract

The current IMF programs in Asia go far beyond the traditional role of the IMF. Instead of requiring macroeconomic policies that can achieve the necessary current account improvements, the IMF is intervening in detailed domestic policies in labor markets, corporate structure, banking, specific taxes and regulation, import rules, etc. The paper argues that such policies are an inappropriate interference with policies that should be left to sovereign governments and are likely to be counterproductive. Similarly, the Fund is seeking to substitute its loans for the obligations to foreign bankers when it should instead be seeking to bring together borrowers and creditors to restructure private loans. The paper is also critical of the monetary and fiscal policies imposed in Korea, the largest of the problem economies.

JEL Classification: F3