CAMBRIDGE: If emerging markets have become a speculative casino, then the IMF's managing director, Monsieur Camdessus, is the chief croupier. From Mexico to Asia, Russia to Brazil the IMF has stood by while currency crises boiled up over the past few years. Of course, the IMF was fast to mobilize vast amounts of money to throw into the pot once it boiled over, but its lack of decisive remedies has failed to move countries out of danger.
If all of this true, why should the IMF's managing director keep his job? Asking for more money and more powers, belatedly bailing the private sector into the process, talking of a new international financial architecture: all of it sounds like hot air, given the Camdessus record. So, first things first: there is an urgent need for dramatic reform at the IMF. The managing director, however, has not got a clue as to how to fix things. M. Camdessus has lost his legitimacy, and he must go.
Abba Eban once said of the PLO that it never missed an opportunity to miss an opportunity. The IMF under Camdessus seems to be just as willfully blind. It has shown a pattern of missing every single crisis or misjudging the sustainability of every financially precarious situation.
Russia is a case in point: the IMF proffered another program, another pile of money was stumped up, but no decisive change was forced on Russian policy. No debt restructuring took place and, small surprise, Russia's economy collapsed. The IMF's answer to this? If we had restructured Russia's debt, there would have been a risk of devaluation. Through its delays the IMF incited both devaluation and default, with a resulting economic collapse far worse than if some preventive debt restructuring had been insisted upon.