Consensus Builds Against IMF Austerity

BUSINESSWEEK: The medicine Asia is being told to swallow may make it sicker. The IMF demands that Asia cut growth and consumption. But that will lead to more overcapacity and exports, not less. It will hurt consumers, make for lower wages, and penalize the poor more than the rich. Japanese, American, and European banks should not be allowed to squeeze every last cent out of their troubled Asian clients. After all, the banks now clamoring for blood once lent huge sums based on flawed credit analysis. Why should the IMF bail them out completely?
-- "Asia: The Road to Real Capitalism," BusinessWeek, December 29, 1997

THE NEW YORK TIMES: The IMF-imposed bailout's "conditions clamp down hard on the [South Korean] economy and threaten to shove it into recession. The fund's terms need to be eased. The bailout agreement was supposed to reassure foreign investors that their Korean loans would be secure. But who wants to invest in an economy that is headed for the tank?
-- "Hurdles Ahead for South Korea," New York Times, January 2, 1998

THE WORLD BANK: "These are crises in confidence. You don't want to push these countries into severe recession. One ought to focus ... on things that caused the crisis, not on things that make it more difficult to deal with."
-- Joseph Stiglitz, chief economist at the World Bank, quoted in Bob Davis and David Wessell, "World Bank, IMF at Odds Over Asian Austerity," Wall Street Journal, January 8, 1998

JEFFREY SACHS: While it pays lip service to "transparency," the IMF offers virtually no substantive public documentation of its decisions, except for a few pages in press releases that are shorn of the technical details needed for a serious professional evaluation of its programmes....
Without wider professional debate, the IMF has decided to impose a severe macroeconomic contraction on top of the market panic that is already roiling these [Asian] economies.... To achieve unchanged low inflation in the face of a huge currency depreciation, Korea will need a brutal monetary squeeze....
It is hard to see how recessionary monetary policy will restore calm....
None of this overkill makes sense for an economy that was (rightly) judged to be pursuing sound macroeconomic policies just months earlier....
The IMF is invested with too much power: no single agency should have responsibility for economic policy in half the developing world.
-- Jeffrey Sachs, head of the Harvard Institute for International Development, "IMF is a Power Unto Itself," The Financial Times, December 11, 1997

MORGAN STANLEY: We should pressure the International Monetary Fund to forsake its 'tough love' fiscal and monetary austerity remedies for Asia. Instead the IMF should implement programs that enable the Asian countries to grow out of harm's way.
-- Barton Biggs, chairman of Morgan Stanley Asset Management, "Can the U.S. Weather Asia's Storm?" Wall Street Journal, January 5, 1998

For more information, contact Robert Weissman, Essential Action, Tel: 202-387-8030, Fax: 202-234-5176; E-mail: [email protected]