IMF: Fischer goes begging; Japan votes no (fwd)

[Robert Weissman <rob@essential.org>]

More propaganda from the IMF on its lack of funds; plus an article
discussing a rare "no" vote on an IMF loan 
 
IMF Lends Record Amounts of Money
Date: Sun Sep 13 13:22:40 CDT 1998
                                         
        WASHINGTON (AP) -- The International Monetary Fund lent
record amounts of money in the past year to deal with financial
crises that swept Asia and Russia, underscoring the need for
Congress to replenish its coffers for future emergencies, a
senior fund official said Sunday. 
        Presenting the IMF's annual report, Deputy Director
Stanley Fischer said the $26 billion in loans has shrunk reserves
to historically low levels, with only $5 billion to $9 billion
left to lend from its regular reserve fund. 
        The Clinton administration has requested an additional
$18 billion for the IMF, $14.5 billion for an increase in the
U.S. share and $3.5 billion for the emergency fund. Last week the
Senate approved the full amount, but a House panel authorized
only the $3.5 billion in emergency funds. Some influential
Republicans have tied their support for IMF funding to what they
say is needed reform for the organization. 
        The administration nonetheless hopes negotiations between
the House and Senate will bring approval for the full $18
billion. Increases in the IMF's regular reserves and the
emergency fund cannot be adopted without the United States, the
largest shareholder. 
        In the face of this Washington debate, Fischer said he
could envisage the IMF using some of its reserves for future
loans but only if it knew additional resources would be available
soon from the United States and other members. 
        ``All these data underscore the need to strengthen our
financial resources, both through the approval of the quota
increase and approval'' of a special emergency fund, Fischer
said. ``As you can see, demands on our resources are not
declining now. Everyone knows the fund's role in Latin America is
at issue.'' 
        But even as Latin American markets experience similar
financial unrest to that of Asia and Russia, Fischer said that so
far no Latin American nation has requested IMF funds. 
        Still, he said, ``there was a record level of fund
lending'' in the past year, when member countries borrowed the
$26 billion, or almost four times the loans of the previous year.
 
        Fischer said these commitments and possible future
financial emergencies in other countries make rapid congressional
action even more necessary, because the ``international financial
system needs a functioning IMF.'' 
        He declared it premature to speculate on what would
happen if Congress fails to support the IMF. 
        In response to suggestions from U.S. Republicans, Fischer
said the IMF's substantial gold reserves could not be tapped
because they provide assurance to members of the organization's
financial viability. He also said the IMF could not borrow funds
from international financial markets because that would mark a 
fundamental change the way the fund has operated since its
creation 53 years ago. 
        Congressional Republicans have promoted both the gold
reserves and the idea of borrowing from the markets as means of
replenishing the IMF's coffers without using U.S. taxpayers'
money. 
        The report was issued in advance of the annual meetings
of the IMF and its sister organization, the World Bank, which
begin Sept. 30. Fischer said the meetings will focus on
strengthening the international financial system based on the
Asian and Russian experiences. 
-=-=-    
                           
Asia, Russia crises strains IMF resources
Date: Sun Sep 13 15:11:26 CDT 1998
                                         
   WASHINGTON, Sept 13 (AFP) - Crises in Asia and Russia prompted
record lending from the International Monetary Fund last year,
and the fund needs a new cash injection to cope, the IMF said in
its annual report Sunday. 
   Because of the emergency lending the IMF's resources have been
brought to a new low, the annual report says. 
   During fiscal 1997-98, which ended in April, the Fund loaned
25.6 billion dollars, or four times the amount spent the previous
year. Since April 1997 the IMF has shelled out another 11 billion
dollars. 
   Total engagements to April are some 43 billion dollars, not
counting 10 billion promised to Russia in July, said IMF director
general Stanley Fischer. 
   "The situation in the global economy is becoming extremely
difficult and the funds are limited," Fischer told a press
conference. 
   Asia's financial crisis broke out in Thailand in July 1997,
and has spread to the rest of Asia and other emerging markets. 
   The largest beneficiaries of IMF resources in fiscal 1997-98
were South Korea, Indonesia, Thailand and Argentina -- not
counting Russia, whose aid arrived later in the year. 
   The level of available funds has fallen from some 59 billion
dollars in April 1997 to 28 billion dollars one year later,
Fischer said. 
   The ratio of liquidity has fallen to 45 percent and is now at
36 percent, after commitments to Russia, he said. 
   The IMF could still lend between five billion and nine billion
dollars before reaching the limit of 30 percent of liquidities,
Fischer said. But the IMF needs the US Congress to approve
Washington's grant of 18 billion dollars. 
   "The Fund needs to strengthen its financial resources," he
said. "We very much hope the Congress will move rapidly." 
   If US lawmakers don't approve the cash, he said, "it would be
a big change in the system ... that has served the world well." 
   Fischer said the IMF has ruled out resorting to its gold
reserves. 
   IMF strategy and funding of troubled economies has been
controversial with US Congressmen. 
   On Friday the US House of Representatives Appropriations
Committee passed a foreign operations spending bill that includes
3.4 billion dollars in funding for the IMF. 
   But the committee rejected an attempt by Democrats to increase
the funding to the full 17.9 billion dollars requested by the
Clinton Administration. 
   Republicans said the IMF must show its terms for helping
countries comply with international trade agreements, eliminate
subsidies, and give foreign creditors better treatment. 
 
 
Japan gave rare "no" in IMF loan to Ukraine: report
Date: Sat Sep 12 08:31:45 CDT 1998
                                         
   TOKYO, Sept 12 (AFP) - In a rare show of discord with other
major economies, Japan tried to torpedo an International Monetary
Fund (IMF) loan to Ukraine, a report said Saturday. 
   The 2.2-billion-dollar loan, proposed to the IMF council on
September 4, was finally approved by a majority vote although it
was opposed by Japan, Swizterland and a few other countries, the
Jiji Press news agency said. 
   Japan appeared to have backed growing dissatisfaction among
Asian countries with the IMF's alleged favouritism toward Russia
and former Soviet republics, Jiji said. 
   "In the Indonesian crisis, the IMF was reluctant to extend a
six-billion-dollar aid package. But it is ready to extend funds
when it comes to a deal deeply connected with Russia," Jiji
quoted a finance ministry source as saying. 
   Japan had always previously supported European countries and
the United States in extending assistance through international
financial bodies, Jiji said. 
   Tokyo questioned the "effectiveness" of the loan, aimed at
enabling Ukraine to shield itself from the effects of the
economic crisis in Russia and to support an ambitious programme
of structural reform. 
   But it was approved by other members of the Group of Seven
(G7) leading industrialised nations. The other G7 members are
Britain, Canada, France, Germany, Italy and the United States.