Borrowing countries get more say in IMF

BORROWING countries are better off in their dealing with multilateral agencies, Central Bank Governor Ewart Williams said Wednesday night. The Governor was speaking at the Clifford Sealy Memorial Series at the Simon Bolivar Auditorium.

He said, though, that the outlook is dimmer in some ways because of drop in international aid from developed countries and, in the downturn in the global economy. Focusing mainly on the International Monetary Fund (IMF), where he worked as deputy director, Williams said borrowing countries have more say in how the Fund’s programmes are implemented. Williams was also advisor to then Central Bank Governor William Demas in the late 1980s when this country was preparing to enter into an IMF programme. The move towards reform began after the crises in Mexico and Asia in the late 1990s. Williams    said critics of the IMF and World Bank pointed to those crises as failures. “The Asian crisis undermined the mystique and self confidence of the IMF and World Bank because even they began to second guess themselves,” he said.

In response, he said, the IMF said while its model was sound, it had made some mistakes. Those included insufficient understanding of the international capital market, not enough poverty alleviation programmes and excessive focus on fiscal policy and not enough on the financial system. The Fund has also moved towards more transparency. Williams said the move to bring insurance companies and pension funds under the Central Bank is part of the new thinking that looks closely at maintaining the strength of the financial system. He added that with more say in IMF programmes, borrower countries also share more of the responsibility.  “You can no longer justify unpopular measures by saying the IMF forced you to do it,” he said.

There is now a move to give borrowing countries more say within the IMF. That is part of a broader movement which includes debt forgiveness. Some issues still have to be resolved, though. Williams said while the Fund is more transparent, that could impact on sovereignty issues. He said if the IMF mandates that a borrower country seek consensus from all stakeholders, that could go against the country’s right to handle its own affairs. Williams also said there was a question as to whether sensitive issues like privatisation plans should be included in publicly accessible IMF documents.