Global Imbalances and Fund Surveillance
- PDF / 141,446 Bytes
- 17 Pages / 441 x 666 pts Page_size
- 27 Downloads / 212 Views
www.palgrave-journals.com/ces
Practitioner’s Corner
Global Imbalances and Fund Surveillance1 VITO TANZI2 Inter-American Development Bank, Integration and Regional Programs Department, Office SW0614, 1300 New York Avenue, NW, Washington, DC 20577, USA. E-mail: [email protected]
Over its existence the IMF has been an instrument with multiple objectives. The main objectives have been (a) surveillance over countries’ economic policies; (b) occasional provision of financial resources for countries undergoing adjustment under a Fund-supported program; (c) technical assistance for structural reforms and for institution building; and (d) ‘certification’ over some desirable actions by counties. The Fund is now criticised for its limited role with respect to global imbalances, which have become very large in connection with a few major countries such as the United States, China, and Japan. Critics are demanding a larger role in multinational surveillance. Some changes would make the Fund more effective: the quotas assigned to the countries could better reflect their current economic power; some expansion in multilateral surveillance work should be planned; the Management and the staff should be instructed to be much more focused or even blunt in their views on countries’ policies; the resources available to the Fund should be increased; and the executive directors should be made more independent from the countries that nominate them. Comparative Economic Studies (2006) 48, 391–407. doi:10.1057/palgrave.ces.8100169
Keywords: IMF, international monetary policy, global imbalances, IMF surveillance programs JEL Classifications: F3, F42, F34
1
Paper presented at the G-24 Meeting in Geneva on March 16, 2006. The author is a former director of the Fiscal Affairs Department of the IMF. He is now a Consultant to the IDB in Washington. The views are strictly personal. 2
V Tanzi Global Imbalances
392
INTRODUCTION At the time of the creation of the IMF: (a) World War II was ending; (b) the Great Depression was still fresh in the memory of many people; (c) there was fear that the world economy would slide back into Depression once the war ended; and (d) a ‘spirit of cooperation’ was shared by the winners of the War. The new institution was designed by the victors to promote their and presumably the world’s interest. The losers played no role and, among the victors, Russia was not interested. Strong leadership was exercised by the American delegation in spite of Keynes’ participation on the British team. In the end the ‘golden rule’ prevailed: he who has the gold makes the rules. It was the Americans that had the ‘gold’ at that time and they made the rules. The new institution was born with particular characteristics: (a) It was small, rule-based, and subjected to strong political controls. (b) At the insistence of the US delegation, it was based in Washington. (c) Also at American insistence it had a resident Board. This gave a great advantage to the United States because the US Treasury was just a few blocks away at a time when
Data Loading...
