Bangkok conference anti-IMF; Japan slams IMF (fwd)

[Robert Weissman <rob@essential.org>]

Anti-IMF movement finds voice in Southeast Asia
Date: Sun Mar 28 04:21:22 CST 1999

   BANGKOK, March 28 (AFP) - An anti-IMF movement gathered last week in
Thailand, where the regional financial crisis first erupted in July 1997, to
denounce the effects of increasing economic globalisation.
   "We are seeing the emergence of a coordinated and organised global
movement against speculative capital and the IMF," said Philippines
University Professor Walden Bello.
   The three-day conference gathered more than 300 sociologists, economists
and militants from 40 countries who called for greater democracy within the
international finance system.
   The activists and academics Friday also demanded the resignation of the
entire senior staff of International Monetary Fund including its head Michel
Camdessus in a final communique at the "Economic Sovereignty in a
Globalising World" conference.
   Bello said the IMF and the World Bank had become part of the problem
rather than a solution.
   He said the conference had agreed to fight for a restructuring of the
global financial architecture.
   "We shall work towards a world not of globalisation but of true
internationalism based on mutual respect and democratic interaction between
free and diverse peoples," Bello added.
   There were tough words too from the head of the Globalisation
Observatory, Susan George.
   "The global financial system is heading straight forward to the
destruction of societies," she said.
   Participants denounced "casino capitalism" in which "the capital
volatility at the heart of the global finance system has become the driving
force of the whole system."
   And they defended a country's right to step in to impose national
controls to protect its own economies and people -- such as Malaysian Prime
Minister Mahathir Mohamad who imposed strict capital controls in September.
   "A rise in nationalism in these countries is rather a healthy thing,"
George told AFP.
   "Financial institutions can no longer ignore the feelings being expressed
here."
   IMF representative Gita Bhatt, who made a surprise appearance at the
conference, said the Fund was improving its methods in a bid to prevent a
repeat of economic crises.
   "There is now a move to include the civil society in the dialogue," she
said, adding the IMF was listening to criticism.
   After imposing rigorous reform programmes on Thailand and South Korea in
return for massive bailouts, the IMF changed course and returned to such
Keynesian methods as reflation to try to drag the countries out of their
economic woes.



Japan slams IMF handling of Asian crisis
Date: Fri Mar 26 02:33:59 CST 1999

   MELBOURNE, Australia, March 26 (AFP) - Japan slammed the International
Monetary Fund (IMF) Friday for failing to grasp the severity of the Asian
crisis.
   Eisuke Sakakibara, vice minister of finance for international affairs,
said the IMF's early growth assessments when undertaking rescue programs in
crisis-hit Asian countries in 1997 were overly optimstic.
   Its failure to "grasp the severity of the economic situation (in Asia)
was critical".
   His comments coincided with the IMF announcing in Washington it was
increasing its loan assistance to Indonesia by one billion US dollars.
   Approval was also given for the release of another 460 million US dollars
to support economic reform, bringing the overall IMF rescue package to 12.3
billion dollars.
   Sakakibara said the IMF's stance on encouraging tighter fiscal policy in
affected countries in order to reduce current account deficits may have been
inappropriate as it was also based on overly optimistic economic outlooks.
   "In my opinion, this contributed to a further contraction of domestic
demand," he told the fourth Manila Framework Group meeting here.
   Sakakibara said both the IMF and the World Bank need to be strengthened
and the IMF's procedures should be improved to ensure input from
shareholders is better reflected.
   "Since the turbulence in the financial markets is not yet over -- even
though it has subsided considerably -- it is all the more important for this
group (IMF shareholders) to emphasise the need for continued vigilance," he
said.
   He also questioned the stringent IMF conditions placed on Indonesia
including the slashing of food subsidies.
   Fifty items of structural reform were required of Indonesia and he
doubted whether "all of these reforms were absolutely necessary to resolve
their crisis".
   "The reform measures were too ambitious, as evidenced by the closure of
16 banks in Indonesia in a matter of a few days without adequate protection
for depositors," he said.
   "I (also) do not understand why there was such harsh criticism by the IMF
of the Indonesian authorities in January, 1998, when they announced a
balanced budget."
   He said the criticism had a severe adverse impact on market confidence.
   Sakakibara added that IMF requests for countries under its programs to
raise interest rates in order to restore market confidence may have led to
instability in terms of exchange rates.
   Interest rate hikes aimed at stemming the outflow of capital from Asian
economies may have convinced investors that there would be a further
economic downturn, he said.
   Sakakibara, known as "Mr. Yen" for his influence on currency movements,
also suggested emerging economies could peg their currencies to a basket of
developed nations' currencies, then adjust the peg periodically to reflect
real exchange rates.
   He said the policy of using interest rate hikes to defend exchange rates
must be used with caution, as it could have an adverse effect on a country's
economic activity and fiscal
position.




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