The new head of the IMF Dominique Strauss-Kahn , a rather conservative French economist and former finance minister begins his term shortly. the New York Times ran an excellent informative story about the IMF in today's, Sept.28 edition.
The article points out that the IMF is no longer the powerhouse it once was able to impose austerity and structural adjustment on countries at will. In fact the worm has turned with many formerly financially straight jacketed countries doing very well indeed thank you very much and having paid off their loans are now rolling in revenues from booming export markets or natural resource jackpots or both.
As such they are in the position to tell the IMF to take a hike or even demand that the way it has conducted its business needs drastic revision.According to the article the Bush administeration has seen the writing on the wall and has agreed to certain reforms which enhance the voting power of countries like China, Turkey,Mexico and South Korea and is considering expanding the list to include a number of other fast growing economies. This is of course a very good thing and one more important straw in the wind that Keynesian developmental approaches are coming back into favour.
Even the Russians are getting pro-active having nominated their own candidate for head, the former Czech Republic Prime Minister, Josef Tosovsky as someone more representative of emerging market economies with a rather different view from hard line laissez-faire.
The IMF with a number of its profitable loans now paid off is running a deficit and may have to draw on its some 300 billion dollar reserves or make staff cuts to balance its books.
High on its agenda ought to be an international conference to reconsider its mandate and to have a proper all sided open debate on appropriate policies for the world economy which draw the correct balance between the markets and the state,and monetary and fiscal policy as opposed to the lop sided arrangements that have been dominant over the past three decades.
That would be a very welcome initiative for Mr. Strauss -Kahn to undertake
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