IMF Says Asian Crisis Still Not Over
The IMF has told the Washington press corps the Asian financial crisis is not over and any conclusions it has reached so-far are preliminary and there are still more lessons to come. (The full IMF report is on Scoop's business wire) John Howard reports.
Speaking at last Saturday's lengthy press briefing, IMF Director of Monetary and Exchange Affairs, Stefan Ingves said the IMF had been mainly dealing with Thailand, Indonesia and Korea and not so much with Malaysia and the Philippines. "When things happen, they happen fast, and sometimes they are quite surprising," he said.
Mr Ingves said that IMF programmes increasingly include structural reforms of financial sectors as a core element.
Despite the Asian crisis running for nearly two years Mr Ingves said the IMF's financial report on Asia is really showing "that we are sort of somewhere - whether we are in the middle of the process or not, it's too early to tell, but somewhere on our way. But it has to be completed."
Mr Ingves said there is no one size-fits-all in this business but the IMF has been roundly criticised for policies that do just that. He used the analogy of a tool box where sometimes you need a spanner and sometimes a screwdriver. He said "the IMF has just recently started a project we call financial sector stability assessments."
One questioner asked, " The other day Mr Camdessus said about widening the mandate of the IMF, talking of controlling capital flows and this is what Malaysia has done to get rid of the problem, their way to solve the problem. What do you think about it?"
Mr Ingves said "Well that is a completely different issue. Today, we are talking about the banking sector. So, it's another press briefing."
The questioner added: " I am sorry, I mean you reply this way then I can also tell you that you cannot say that this is a different issue and you cannot talk about it. We are talking about the banking sector and the crisis and capital controlled flows is an issue in this subject. You cannot say that we don't need to talk about it."
Mr Robert Brauning, Advisor to the IMF External Relations Department, who was chairing the meeting stepped in saying there were two seperate sets of issues and we are discussing this paper and financial sector restructuring and technically capital controls is very different from this. "If we can move on?", he said.
From reading the IMF report about the way the IMF is operating and the way some countries are run came the realisation that my grandma', and probably everbody else's grandmother, has got more idea about balancing a budget and running finances than many of the world's high paid so-called experts.
She knew that you earned, you spent a little and you saved a little. She instinctively knew that when financial difficulties came you might have to sell a treasured possession to make ends meet.
She knew the old tradition; Earn $2, spend $1.95 - outcome happiness. Earn $2, spend $2.10 - outcome misery.
I reckon we should get a couple of hundred grandma's and send them around the world to solve the problems in the financial hot-spot's. We'd probably be better off.