International Economics

IMF preachers barely conceal self-interest

PUBLISHED : Thursday, 08 October, 1998, 12:00am
UPDATED : Thursday, 08 October, 1998, 12:00am

Sometimes it seems that politicians never concentrate more on their own interests than when they purport to be speaking for the good of the entire world. Exhibit A - the International Monetary Fund and World Bank meeting in Washington.


First we had US President Bill Clinton saying of the spreading global economic crisis that 'we must take steps to help those who have been hurt by it, to limit the reach of it and restore confidence in the global economy'.


Fine sentiments for the pulpit but, when Mr Clinton got down to the steps that we must take, they were to avoid 'false cures' such as capital flow controls and trade protectionism. More free trade and more economic growth for America and Europe was Mr Clinton's message.


The rest of the world has some experience of what America means by free trade. It includes the freedom of American salesmen to peddle cigarettes, teeth-rotting drinks and junk food around the world unhindered.


Lest this return fewer profits than they would like, American diplomats busy themselves pressuring other governments to ban 'parallel imports' of these things from legitimate suppliers whose only sin is to seek wider markets than head office would like them to have.


Mr Clinton does not so much want to dissolve trade protectionism as to protect American trade from protectionism. No blame falls to him for this. It is what his voters want. He is a politician. The only thing unseemly is that he offers these sentiments from an IMF pulpit.


Then we have IMF managing director Michel Camdessus preaching the gospel of steady nerves and telling us that 'if all countries pursue stability, structural adjustment and orderly liberalisation of their economies, this crisis can be overcome'.


Steady nerves are certainly required for IMF prescriptions. Just ask Indonesians who have been forced to take this bitter pill and are at present suffering interest rates in the range of 60-70 per cent while increasing numbers of them are running short of food. They see this crisis overcome by a tombstone.


Yes, it is in many ways their own fault. What is not their fault, however, is that the doctor they consulted has not read his medical texts since the 1950s and has not come up with any new remedies although he knows they may be required.


But the IMF would create great uncertainty about its role if it concedes that it may have to reconsider the way it does things. Mr Camdessus has taken the easy political way out - protect the IMF first and then see to the others. It is understandable. This is what donors to the IMF money want it to do. But why then should Mr Camdessus purport to speak for the have-nots when he speaks for the haves? Next comes World Bank president James Wolfensohn, a former New York investment banker who has been converted to World Bank jargon. He spoke of 'human and social accounting' and a 'new approach'. His impoverished client states should love him.


But let them miss an interest payment on a World Bank loan in order to pay for food imports and they know they'll see another side of Mr Wolfensohn. There is no new approach when this happens nor much human and social to preface the accounting.


Finally comes our own financial secretary, Donald Tsang Yam-kuen, to plead that something be done to make international capital flows more transparent and subject to some control by countries which suffer from the more volatile of them.


It must be music to the ears of the IMF which has been pleading with the Hong Kong Government for years to publish balance of payments figures so that Hong Kong's capital flows may become visible. The only response so far has been publication of a wild guess for 1994.


Non-transparency of capital flows has done more to boost Hong Kong's economic growth than to retard it over the years but one has the impression of course that Mr Tsang is speaking of other countries' capital flows, not his own.


It is no great surprise that many people who attended this IMF talking shop have deemed it a failure.