Asia pressed to play a greater role in IMF

Asia pressed to play a greater role in IMF

SINGAPORE (AFP): Asia needs to play a greater role in the
workings of the International Monetary Fund (IMF) if it wants to
have an impact on policy making, first deputy director Stanley
Fischer said here Friday.

Fischer defended the fund from criticism that its bitter
medicine after the 1997-98 Asian crisis left a sour taste in the
mouths of those hurting the most, and said the IMF board
preferred to work by consensus.

"The effectiveness of executive directors was more related to
their persuasiveness than the size of their vote," he said in an
address to bankers and economists.

Asia has five of the 24 seats on the board and "it is
important if Asia's voice is to be heard that these positions are
occupied consistently by the highest quality candidates.

"Those directors who have coherent positions and the ability
to advance them will usually see their views reflected in fund
positions on the issues."

Describing his address as probably his last in Singapore
before leaving office, the IMF's number two reflected on the
Asian crisis and the fund's need to spearhead rescue packages
worth billions of dollars for Indonesia, South Korea and
Thailand.

The IMF has been accused of applying a template solution to
the different crises in the three countries, and of imposing
heavy debt repayment burdens on countries at the cost of social
spending.

Fischer said the crisis warning signs were evident long before
the currency collapse in mid-1997, but they were ignored by
governments

"The economies began to turn only when new governments came in
to power, first in Thailand, then in Korea and last and with the
most disruption unfortunately in Indonesia on May 1998."

Fischer outlined several developments brought in as a result
of the Asian crisis, including improved surveillance,
reconsideration of the role of exchange rate and capital account
regimes, and the introduction of a contingent credit line and a
supplementary reserve facility.

"If all these measures had been in place perhaps it would have
been possible to advance the adjustment thereby mitigating if not
preventing the crisis," he said.

Since 1997-98, the IMF has sharpened its scrutiny of national
policies and of international financial markets, while producing
a constant flow reports focussing on daily developments.

"The fund has joined the information age and not too soon
either.

"Of all the changes that have taken place in the fund in
recent years, this increase in two-way transparency between the
fund and the outside world is the most significant.

"We talk about transparency because it helps ensure better
informed investors but it also ensures better informed citizens
and it encourages policymakers to strengthen their policies in
their institutions."

Had there been more transparency in 1997, more would have been
known about the state of foreign reserves in the crisis countries
"and would have forced earlier action on the exchange rate."