MH BOUCHET/CERAM (c) Riesgo-País ESAN Julio de 2006 F El FMI frente a sus criticas Krugman,...

MH BOUCHET/CERAM (c)

Riesgo-País

ESAN Julio de 2006

El FMI frente a sus criticas

Krugman, Stiglitz, Sachs…


El papel del Fondo Monetario Internacional


La sala de la junta ejecutiva del FMI en Washington


The IMF’s Managing Director: Rodrigo Rato (04/2004)

following Horst Köhler (05/2000-04/2004)

Second Vicepresident and Minister of Economy and Finance since May 1996. Studied law at the Complutense University of Madrid from 1968 to 1971. Master in Business Administration at Berkeley, University of California from 1972 to 1974.


FMI & El BANCO MUNDIAL:Las dos “instituciones hermanas”

FMI 2,700 empleados Union de crédito cooperativo

con 184 países miembros que proveen de cuotas que alcanzan en total 300,000 millones de $.

Prevención de crisis y financiamiento a corto plazo de problemas temporales con la balanza de pagos

Programas de estabilización económica.

Asistencia técnica

IBRD + IFC + IDA + MIGA

10,000 empleados El Banco beneficia de su rating

de Triple A para emitir bonos globales de largo plazo en el mercado de capitales

IBRD financia reformas estructurales y políticas de desarrollo sostenible así como inversiones en infraestrucutura (75%) PIB > US$1305

AID financia países con PIB <US$865 por más de 35/40 años

El capital del BM alcanza $184 billones de dólares.


Que NO hace el FMI ...

No subsidia el desarrollo económico en las naciones más pobres

No es un banco central internacional que controla la econom ía global y que subordina a los gobiernos de los diferentes estados

No es una organización política investida con un sello misionario de rectitud fiscal

No obliga a sus miembros a la austeridad economíca


Una asistencia financiera pragmática No hay un complot mundial en contra de ningún

país No hay gobierno mundial en la “sombra”

busqueda de una combinación óptima de financiamiento externo y ajuste doméstico para reducir el costo social del “amarre al cinturón” en caso de crisis de balanza de pagos


el FMI es una institución cooperativa financiera

Vigilancia de las políticas económicasFinanciamiento temporal de la balanza de

pagos Diseminación de información & de datos Asistencia técnica & servicios de asesoríaForo permanente para la colaboración internacional (Asamblea Anual con el Banco

Mundial en Septembre de cada año)


promueve la cooperación sobre temas monetarios

internacionales promueve la estabilidad en las tasas de cambios promueve la libre movilidad de fondos entre

países apoya el libre intercambio y politica economica

basada en el libre mercado acorta la duración y disminuye el grado de

desequilibrio en la balanza de pagos suministra asistencia financiera temporal

El papel evolutivo del FMI en la economía global


Les critiques (libérales) du FMI Henry Kissinger: « le FMI fait plus de mal

que de bien! »

A la suite de l’intervention du FMI dans la crise asiatique: le capitalisme de marché reste le meilleur moteur de croissance économique et de hausse générale du niveau de vie. Mais la mondialisation exacerbe la disparité entre l’organisation politique du monde et son organisation économique. Par ses interventions stéréotypées, au nom de l’orthodoxie du libre-échange, le FMI aggrave souvent l’instabilité politique via des cures trop sévères et mal ciblées d’austérité.

Il faut transformer le FMI et encourager les capitaux investis à long-terme tout en protégeant les pays des capitaux spéculatifs avec une meilleure régulation et coordination internationales.

(Source: Le Monde/1998)


Paul Krugman’sPaul Krugman’s view on economic crisis

Born in 1953; Ph.D. in 1977 from MIT. In 1982-3, he worked at the White House for the Council of Economic Advisors. Received the prestigious John Bates Clark Medal in 1991. Currently at Princeton. Krugman's main focus in economics has been on international trade. He helped found the "new trade theory", which deals with the "consequences of increasing returns and imperfect competition for international trade."


Paul Krugman’s view on globalization In the 1980s, openness to trade was widely

believed to reduce the likelihood of financial crises.

Today, growing global integration does predispose the world economy toward more crises because it creates pressures on governments to relax restrictions. Economies are doing better in good times but are far more vulnerable to sudden crises due to rapid capital flight. A best guess is surely that the ride will continue to be very bumpy for many years to come.


“The logic of catastrophe was pretty much the same in Thailand, Malaysia, Indonesia and South Korea. (Japan is a very different story.) In each case investors--mainly, but not entirely, foreign banks who had made short-term loans--all tried to pull their money out at the same time. The result was a combined banking and currency crisis:

a banking crisis because no bank can convert all its assets into cash on short notice; a currency crisis because panicked investors were trying not only to convert long-term assets into cash, but to convert baht or rupiah into dollars. In the face of the stampede, governments had no good options. If they let their currencies plunge, inflation would soar and companies that had borrowed in dollars would go bankrupt; if they tried to support their currencies by pushing up interest rates, the same firms would probably go bust from the combination of debt burden and recession. In practice, countries split the difference--and paid a heavy price regardless.”

Paul Krugman’s view on Asia’s 1997-98 economic crisis


“Was the crisis a punishment for bad economic management? Like most clichés, the catchphrase "crony capitalism" has prospered because it gets at something real: excessively cozy relationships between government and business really did lead to a lot of bad investments. The still primitive financial structure of Asian business--too little equity, too much debt and too much of that debt consisting of soft loans from accommodating banks--also made the economies peculiarly vulnerable to a loss of confidence. But the punishment was surely disproportionate to the crime, and many investments that look foolish in retrospect seemed sensible at the time. After all, suppose that the United States, which currently is pulling in overseas money at the rate of about $300 billion annually, were to see that inflow suddenly become a trillion-dollar outflow (which, relative to the scale of the economy, is what happened to Asia's crisis-hit countries). How solid would America's financial system look?”

Paul Krugman’s view on Asia’s crisis


Joseph Stiglitz’s views


Joseph Stiglitz Distinguished academic career on the faculty of MIT, Yale

and Stanford Member of the Council of economic Advisors in the Clinton

Administration in 1993 and later named Council’s Chairman 1997: Senior Vice President and Chief Economist at the

World Bank 2000: mounting tensions with US Treasury and IMF :

he leaves the World Bank Mid 2001: he joined faculty of Columbia University October 2001: Nobel Prize in Economic Science 2002: Globalisation and its discontents became a best-seller


Core ideas

Poverty is an « affront to human dignity » G7 governments urge liberalization on developing countries

while maintaining trade restrictions and pushing intellectual property protection into the WTO.

The IMF's policies, in part based on the outworn presumption that markets, by themselves, lead to efficient outcomes, failed to allow for desirable government interventions in the market.

Asymmetries of information prevent markets from full efficiency. Government and market are complementary and there is an important role, if limited, for government to play.


What is asymmetry of information?

It is the difference in information between two economic agents within an economic relation (e.g.: « the worker and his employer, the lender and the borrower, the insurance company and the insured »)

According to Stiglitz, financial markets cannot regulate themselves because anyone do not have the same information at the same moment. Therefore the aim is to find the best structure to regulate markets (and not to let them work by themselves).


Consequences Deregulation will not promote financial development

when information is asymmetric and competition inadequate. The economic efficiency is not secured. It will spur corruption and create an oligarchic elite that opposes the emergence of competitive markets.

The partisans of the « Washington consensus » overlooked the importance of economic and corporate governance, underestimate the difficulty of building institutions, and forgot that many countries lack the sophisticated public administrations needed to ensure adequate competition.


The challenge of the IMF Increased transparency at the IMF is essential.

Decisions there are made on the basis of ideology and bad economics. When crises hit, the IMF prescribes outmoded, inappropriate, if standard solutions, without considering the effects they would have on the people in the countries told to follow these policies.

No discussions of the consequences of alternative policies. Ideology guides policy prescription..


Jeffrey Sachs’ views


Jeffrey Sachs Director of the Center for International

Development and professor of international trade at Harvard University

Economic advisor for the government of Poland in 1990 and for Russia's President Boris Yeltsin from 1991 to 1994: he advocated "shock therapy" to create market capitalism in Russia

Special Adviser to the UN’s General Secretary


The situation in Asia There vas no « fundamental » reason for

Asia ‘s financial calamity– Budgets were in balance or surplus– Low inflation– High private savings rates– Economics were poised for export growth

– The IMF’s tough macro-economic conditionality for approving financial support led to recessionary monetary policy and increased panic


The Asian crisis: an unpredictable crisis

In Thailand: currency overvalued + overcapacity in real estate

Bath devaluation required in 1997 Overstated financial panic of the investors in Asian

countries + domino effectFlight of capital in an opposite flow

Asian countries needed really significant financial sector reform

But not sufficient cause for panic and for harsh macroeconomic policy adjustments


IMF declarations

Before the Asian crisis (April 1997):« Directors welcomed Korea’s continued impressive

macroeconomic performance [and] praised the authorities for their enviable fiscal record »

« Directors strongly praised Thailand’s remarkable economic performance and the authorities’ consistent record of sound macroeconomic policies »

IMF, 1997 annual report

MH BOUCHET/CERAM (c) Riesgo-País ESAN Julio de 2006 F El FMI frente a sus criticas Krugman,...

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