Multilateral institutions lack responses to Asian crisis

Multilateral institutions lack responses to Asian crisis

SINGAPORE (AFP): Appropriate policy responses to Asia's economic woes by multilateral institutions such as the International Monetary Fund (IMF) and the Association of Southeast Asian Nations (ASEAN) have been inadequate, a survey among expatriates in 12 Asian countries revealed.

"The IMF has come in for the most flack," with the main criticism "that it failed to take into account the social impact of its rescue programs and wound up causing undue hardship for the people of the countries it is trying to help," said the independent think-tank Political and Economic Risk Consultancy in a report received over the weekend.

Expatriates from Malaysia, where the government has been the most vocal in expressing its views about the role of multilateral institutions in the region, gave the IMF a low rating of eight on a scale of zero to 10 with 10 being the worst possible score.

To Malaysian Prime Minister Mahathir Mohamad, "the IMF was working in the interests of the West, which wanted to bring the country to its knees in the guise of economic reform. Following IMF dictates would therefore be tantamount to economic suicide," the report said.

However the IMF received favorable marks in countries such as South Korea and Thailand where its help was most needed, as well as in Hong Kong and Singapore "where market-oriented policies and more open financial systems of a type advocated by the Fund have long been in place and appreciated."

In Indonesia, a multi-billion dollar beneficiary of IMF aid, the IMF's bargaining power "is probably set to decline even further," the report said.

It noted that foreign aid donors to Indonesia "have been dealing with a government that is not really in control of the country," and that detailed letters of intent between the IMF and Jakarta "are often left unfulfilled."

Another financial institution, the Asian Development Bank, was rated on average, a 5.72, only slightly more harshly than the IMF's 5.62 average rating.

"That is mainly because it has been more of a follower than a leader in the crisis," and reflected the politics of Tokyo, which has been much less aggressive than Washington in trying to influence developments in the region, the report said.

In the same survey, ASEAN rated an average of 7.04, with expatriates from Malaysia and the Philippines giving it very poor marks for its policy responses to the regional economic crisis.