[vnforum] IMF admits mistakes in handling Asian crisis

kenneth phan kenphan007 at yahoo.com
Thu Nov 13 07:32:55 PST 2003


IMF admits mistakes in handling Asian crisis 

--------------------------------------------------------------------------------
  
By Samantha Brown 
  
BANGKOK - The International Monetary Fund (IMF)
admitted on Thursday it made mistakes in its
controversial handling of the 1997-1998 Asian
financial crisis which put affected countries under
stringent programs. 
Charles Adams, assistant director of the IMF Office
for Asia and the Pacific, said the IMF was still
nutting out where it went wrong when it stepped in
with major lending programs for Thailand, South Korea
and Indonesia. 

"I think we have acknowledged that we at the fund did
make mistakes during the Asian crisis. Not everyone
agrees on exactly what the mistakes are," Adams told a
seminar which is part of a regional outreach project. 

"Some say we lent too much, some say we lent too
little. Some say we imposed too tight conditions, some
say the conditions weren't tight enough," he said. 

"But I think a sort of consensus is emerging... in the
context of our lending, that conditions we imposed on
lending were not necessary and may not have been
helpful." 

As a result the body was trying to "streamline" future
conditions, with the fund now having to justify why
conditions are imposed, while on the financing side
the IMF was in "sort of a middle ground". 

"Many of us at the fund would actually like the fund
to be able to lend more but some of our shareholders
are concerned about moral hazard... so we strike a
balance," he said. 

In Asian nations whose economies were laid waste by
the meltdown, the IMF's demands for reform and tough 
restrictions caused widespread anger. 

In one act of defiance, Malaysia pegged its ringgit to
the US dollar to protect it from currency speculators,
a move that was criticised at the time by the IMF, but
which is generally now viewed as a wise decision. 

Adams said the organisation was working to ensure any
emerging crisis would not spill over into neighbouring
countries, as it did after the 1997 devaluation of
Thailand's baht currency sparked the devastating
crisis. 

"One of the things we learned in Asia is that we
really have to try and bottle up the problem in one
country and address it quickly so that it doesn't
spread to other countries," he said. 

The IMF was also trying to encourage countries to be
careful when opening up their capital accounts to the
world to ensure they can deal with "very fickle"
international capital markets. 

"But I think the key thing we've learned there is
preventing crisis is the first line of defence. Once
the crisis starts, it's very messy, it's very costly.
The primary emphasis should be on prevention." 

Market systems would need to remain disciplined, he
said. 

"So we're always going to have some pressures, the
question is can we get the balance right." 

Asian countries have clawed their way out of the
crisis period and along with their Pacific
counterparts are expected to have the world's fastest
growing economies this year, the IMF said in a
September report. 

AFP


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