A more accountable IMF

Without the U.S. Congress belatedly approving the U.S.$18 billion in additional funds -- which should result in further payments from other countries -- the International Monetary Fund (IMF) might have been too cash-strapped to finance its forthcoming rescue package for Brazil. And some aspects of the deal between the Clinton administration and Republican-dominated Congress are worthy of praise.

The insistence that the IMF must begin releasing summaries of board meetings and other major documents will go a long way to addressing long-standing criticism of the fund's excessive secrecy and lack of accountability. Procedures will also be put in place to advance long-overdue reform of the IMF.

The requirement that the fund put more effort into protecting workers' rights and the environment addresses areas often neglected in the past. Nor, in principle, is there anything wrong in the stipulation that IMF bailout recipients must liberalize trade, adopt fair lending practices and laws on bankruptcy.

But the danger is that such sweeping stipulations may reinforce the IMF's tendency to adopt "one size fits all" packages of tough monetary measures, the most criticized aspect of its response to the Asian crisis. Concerns that over-generous bailouts will encourage fiscal irresponsibility have also led Congress to insist on tougher loan conditions than the IMF has previously adopted, including higher interest rates and shorter repayment periods.

Political and social realities must also be taken into account by the fund. Its failure to do so in Indonesia was one factor behind the bloodshed earlier this year. And there is a risk that some of the conditions Congress has attached to its approval of this $18 billion will cause the IMF to become even less sensitive towards bailout recipients, when it should be moving in the opposite direction.

-- The South China Morning Post, Hong Kong