Date: Sun Apr 23 2006 - 09:29:44 EDT
via Joe Smith on Globolist./ Jerry ================================================================ "A shrinking loan portfolio greatly diminishes the IMF's influence over global economic policy... Once IMF loans are ended, the momentum for economic reform in one-time borrowers may fizzle." 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."
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