[OPE-L] Shed a tear for the IMF?

[glevy@xxxxxxxxx]

via Joe Smith on Globolist./ Jerry
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"A shrinking loan portfolio greatly diminishes the IMF's influence
over global economic policy...  Once IMF loans are ended,
the momentum for economic reform in one-time borrowers may fizzle."

Moffett, Matt and Bob Davis. 2006. "Insufficient Fund: Booming Economy
Leaves the IMF Groping for Mission." Wall Street Journal (21 April):
p. A 1.

"Now the IMF faces a novel predicament: A robust global economy,
growing at a 4% clip since 2003, has left the IMF with a dearth of
financial firestorms to manage, and fewer countries willing to borrow
from it and heed its dire lending conditions. Flush with cash and
eager to regain control over their economic policies, 10 countries,
from Russia to Brazil to Argentina, have repaid loans to the IMF
ahead of schedule in recent years. The IMF's current loan portfolio
of $35 billion is its smallest since the 1980s."

"A shrinking loan portfolio greatly diminishes the IMF's influence
over global economic policy. IMF loan disbursements are conditioned
on the enactment, within defined time frames, of measures including
privatization of state-owned companies, budget cuts, interest-rate
increases and stiffer financial regulation. Once IMF loans are ended,
the momentum for economic reform in one-time borrowers may fizzle.
That's a worry in Latin America, especially where populist politicians
are winning power across the continent."

" Fewer loans also means less interest income, and thus fewer dollars
in the IMF coffers. In an irony that has provoked tittering among many
emerging-market finance ministers, the agency that has long preached
belt-tightening now must practice it itself. Over the next three
years, the IMF figures it may sustain operating losses of nearly $600
million, and have to dip into its nearly $9 billion in cash reserves
to cover the shortfall. To reduce the red ink, the Fund has already
capped personnel levels at 2,800 and is planning budgets that would
lag behind the rate of inflation. It may start charging nations for
technical advice that the IMF now provides free. If that doesn't
work, it may have to tap its vast gold hoard of 103 million ounces,
valued at $63.5 billion at today's prices and held in the vaults of
IMF member nations."

"The IMF is trying gamely to change the way it does business, from
lender to "confidential adviser," as Rodrigo de Rato, the IMF's
managing director, puts it. That entails a mixture of sound economic
advice, outreach to one-time opponents -- and a splash of public
relations. Arm-twisting is out; persuasion is in."