[stop-imf] Administration rejects IMF, World Bank changes| (fwd)

[Robert Weissman]

Note the date on this is June 11

Administration rejects call for sweeping IMF, World Bank changes|
By MARTIN CRUTSINGER|
|AP Economics Writer|

 WASHINGTON (AP) =97 The Clinton administration is pushing a relatively
benign overhaul of the International Monetary Fund and the World Bank over
a set of sweeping operational changes that congressional Republicans are
promoting.

 Rejection of the broad changes could spell trouble for two major
administration initiatives: reduction of debt for the world=92s poorest
countries and increased financial support to the World Bank for the fight
against AIDS in developing countries.

 Republicans say unless the administration shows more willingness to
accept a congressionally appointed advisory panel=92s recommendations for
the international lending institutions, it will be denied approval for its
debt and AIDs initiatives.

 The administration sent to Congress on Friday a formal 45-page response
to proposals put forward by the commission, headed by Allan Meltzer, an
economics professor at Carnegie Mellon University.

 Treasury Secretary Lawrence Summers said that the commission=92s proposals
would so weaken the IMF and the World Bank that =91=91vital U.S. interests
would be compromised because of a reduction in their capacity to respond
effectively.=92=92

 The Meltzer commission recommended that the IMF restrict its operations
to providing short-term emergency loans to countries facing financial
crisis that have pre-qualified by meeting IMF guidelines for economic
reform.

 For the World Bank, the Meltzer commission recommended that it halt
three-fourths of the loans it now makes, which go to countries that have
access to international capital markets.

 In its report, the administration argued that such an approach would have
hamstrung the IMF during the 1997-98 Asian crisis, and the restrictions on
the World Bank would keep loans from going to countries where millions of
poor people live.

 =91=91If these recommendations had been in place during the Asian financia=
l
crisis, it would not have been possible to mount the kind of international
response that was ultimately successful in containing the crisis and
preventing it from having a significant adverse impact on the U.S.
economy,=92 =92 Summers told reporters at a briefing.

 The administration is pushing a more limited set of changes that would
open the two Washington-based institutions to more public scrutiny and
eliminate some of the overlap between them.

 But top Republicans, who have long complained about the IMF and the World
Bank, say the administration needs to be more open to the Meltzer panel=92s
recommendations. They have warned the administration that it risks
approval of its requests for increased support for debt relief and AIDS
programs in Third World countries if there is no compromise.

 =91=91We are at an impasse with the administration,=92=92 complained the S=
enate
Banking Committee chairman, Phil Gramm, R-Texas. =91=91I am willing to
compromise, but only if we are going in the right direction.=92=92

 Summers said he believes compromise is possible because the urgent need
to provide debt relief and AIDS funding cannot wait until next year.

 =91=91There is a strong desire to find effective solutions,=92=92 Summers =
said.
=91=91I think we will be able to work through the issues this year.=92=92 |