[stop-imf] FT: Overhaul urged of IMF, World Bank

[Robert Weissman]

				Financial Times
                           Overhaul urged of IMF, World Bank
                           By Stephen Fidler - 24 Feb 2000 14:06GMT

                                                  A special US
congressional commission is expected
                                                  next month to recommend
a radical reduction in the roles
                                                  of the International
Monetary Fund and the World Bank.

                                                  It is likely to propose
that the IMF focus on short-term
                                                  finance to resolve
crises in emerging economies, and
                                                  that the World Bank
shift towards providing poor
                                                  countries with grants
rather than loans.

                                                  The commission, chaired
by Allan Meltzer, an economics
                           professor at Carnegie Mellon University, is
also expected to recommend the
                           abolition of the International Finance
Corporation, the bank's private sector arm,
                           and MIGA, its political insurance unit.

                           It is likely to call for the World Bank to pull
out of Asia and Latin America, leaving
                           the ground to two regional institutions, the
Asian and the InterAmerican
                           Development Banks.

                           The body - the International Financial
Institution Advisory Commission - was
                           established by Congress last year to report on
the workings of the international
                           institutions. It must report to Congress by
March 9.

                           The broad thrust of its likely conclusions has
been widely circulated in
                           Washington, though the findings have only just
reached the draft stage and may
                           change. Its 11 members are vote on the findings
next week, and it is not yet clear
                           how large the majority voice will be.

                           The commission comprises six experts nominated
by the Republican majority,
                           including Mr Meltzer, a monetarist economist,
and Charles Calomiris, an IMF critic
                           from the libertarian Cato Institute, and five
nominated by the Democrats, including
                           Harvard professor Jeffrey Sachs and Fred
Bergsten, head of the Institute of
                           International Economics.

                           The recommendations are based on the overlap
the commission found between
                           the roles of the IMF and the bank and between
the bank and regional development
                           banks. Most multilateral money goes into about
a dozen countries already open to
                           private capital markets.

                           The tentative recommendations would have the
IMF focused almost entirely on its
                           responsibilities to resolve liquidity crises in
member countries. It would provide
                           short-term funds at very high interest rates
but only against collateral. The fund
                           would pull out of Africa.

                           Under the plans, the World Bank's
responsibilities would shrink to providing
                           mainly grants to countries in Africa, eastern
Europe and the former Soviet Union.
                           The bank would stop providing finance to
countries with annual income per head
                           of more than $2,500.