Re: shrinking into irrlevance? Let's hope

[Jim Devine <jdevine03@xxxxxxxxx>]

of course, if the East Asian central banks start dumping dollar
denominated assets in favor of Euro and other assets, so that the
dollar falls drastically and imposes capital losses on the
aforementioned CBs, the IMF might find its "services" in demand again.

what a pleasure it is, however, to hear about the IMF tightening its
spiked belt. I hope the spikes are on the inside...

On 4/21/06, michael perelman <michael@xxxxxxxxxxxxxxxxx> wrote:
> 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."
>
> --
>
>
> Michael Perelman
> Economics Department
> California State University
> michael at ecst.csuchico.edu
> Chico, CA 95929
> 530-898-5321
> fax 530-898-5901
>


--
Jim Devine / "There can be no real individual freedom in the presence
of economic insecurity." -- Chester Bowles