The IMF's mistakes

Humility is a new attribute for the International Monetary Fund, and one which will greatly improve its battered image in Asia.

Once the regional crisis is history, it may turn out to have brought useful lessons for all concerned. There is evidence of that in the note of contrition running throughout the IMF report on the result of its strategy in Indonesia, Korea and Thailand. The frank, self-critical note of the document published this week replaces the tone adopted by the fund in the past.

If the IMF had listened more rather than lectured, some of the worst mistakes might have been avoided. Financial reforms were necessary, and must be pursued, but they should have been tailored more to individual situations and should not have taken precedence over social stability. The political aftershocks are still reverberating, and it may be years before things get back to normal.

That is not to say that the reforms brought in at the IMF's bidding should be altered -- merely that they need to be better molded to take account of the wider context of the countries concerned. It was the conduct of the tiger economies which brought on the crisis: if and when responsibility is clearly apportioned, several regimes will have to admit that belief in their own invincibility was as responsible for their woes as speculators.

Without the fund, the region would be in even worse shape than it is. But if the IMF had factored into its rescue packages the need to protect the mass of the population from the aggravated poverty and hunger which ultimately brought mobs on to the streets in Indonesia, international confidence and internal order would have been more likely to have been maintained.

As the organization now seems to recognize, too much of its policy concentrated on reforms imposed without reference to the suffering caused to people who were the victims of corruption, cronyism and economic mismanagement.

The reforms needed to be implemented with speed. But the process could have been managed better. If, through ill chance, there is a next time, a differently modulated approach will be in order.

-- The South China Morning Post, Hong Kong