By MARY ANASTASIA O’GRADY , Wall St. Journal, March 4, 2005; Page A15
“When Stanley Fischer stepped down as deputy managing director of the
fund in 2001, he gave an interview in which he defended his liberal
bailout strategies during his tenure at the fund. ‘Those who emphasize
that IMF lending should be smaller and less frequent are implicitly
saying there should be much less international lending and reliance on
international capital markets,’ Mr. Fischer said.
Well, not exactly. What we are saying is that capital flows should be
proportional to the credibility earned by adhering to liberal
economics, limited government and respect for institutions. But that
makes demands. Why go there when IMF largess will paper over policy
mismanagement?
Closing down the IMF may be too much to hope for. But it is at least
important to note that Argentina provides two priceless lessons. The
first is that IMF largess not only damages reform momentum but also
exacerbates risk. The second is that borrowers and lenders can work out
bond defaults on their own, and when they do, incentives are likely to
return to the emerging markets, raising accountability in governance.”