Beyond the IMF

25 Pages Posted: 2 May 2007

See all articles by Richard Webb

Richard Webb

University of San Martín de Porres - Economic Research Center

Devesh Kapur

University of Pennsylvania - Center for the Advanced Study of India; Center for Global Development

Date Written: August 2006

Abstract

A consensus has developed that the International Monetary Fund (IMF) is not fulfilling its role, prompting multiple proposals for reform. However, this paper argues that the focus on reform should be complemented with an exploration of alternatives outside the IMF which hold the potential to not only give developing countries greater bargaining leverage with the Fund but also, by increasing competition, spurring the institution to better performance. The paper argues that most of the IMF's functions are being carried out in part through alternative institutional arrangements. It focuses in particular on the insurance role of the Fund and argues that developing countries are developing alternative insurance mechanisms, from a higher level of reserves, to regional co-insurance facilities to remittances as a counter-cyclical source of foreign exchange. The de facto exit of its clientele has been driven by the high political costs associated with Fund borrowing and now poses unprecedented challenges for the Fund, in particular pressures on its income. The paper argues for a rapid restructuring and significant cuts of the Fund's administrative budget with the budget savings instead directed to lower the interest rates charged to borrowers.

Keywords: IMF, reform, developing countries, insurance, foreign exchange, remittances, reserves

JEL Classification: F33, F34, F35

Suggested Citation

Webb, Richard and Kapur, Devesh, Beyond the IMF (August 2006). Center for Global Development Working Paper No. 99, Available at SSRN: https://ssrn.com/abstract=982965 or http://dx.doi.org/10.2139/ssrn.982965

Richard Webb (Contact Author)

University of San Martín de Porres - Economic Research Center ( email )

University Campus Av.
Lima
Peru

Devesh Kapur

University of Pennsylvania - Center for the Advanced Study of India ( email )

Philadelphia, PA 19104
United States

HOME PAGE: http://www.sas.upenn.edu/casi/about/devesh.html

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