Can IMF resist pressure to bend its own rules?
Letter to the editor

ID1974 / Shutterstock.com

Sir, Your editorial “eurozone should relieve the IMF” (August 2) is right on the mark in suggesting that, on the basis of its recent Greek experience, the International Monetary Fund should not be called upon to provide future large-scale lending programmes in Europe. This would especially appear to be the case now that Europe has an adequately funded European Stability Mechanism in place and now that the European Central Bank has committed itself through its Outright Monetary Transaction programme to buy unlimited amounts of short-dated sovereign bonds of the European peripheral countries subject to those countries signing up to economic adjustment programmes.

The fact that Europe now does have adequate financing to fund any future European bailout programme should allow the IMF to limit itself in Europe to its traditional role of being a catalytic lender and the provider of a seal of approval for sound macroeconomic policy management.

The question remains, however, whether, with smaller European lending programmes, the IMF will be any more successful than it has been to date in resisting European government pressure to bend the IMF’s own rules in those lending programmes. One would have thought that if the IMF could not resist such pressure when it had an unusually large amount of its own money at risk, it will be even less successful in resisting that pressure when it has relatively little of its own money at stake.

Desmond Lachman, American Enterprise Institute, Washington, DC, US

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Desmond
Lachman
  • Desmond Lachman joined AEI after serving as a managing director and chief emerging market economic strategist at Salomon Smith Barney. He previously served as deputy director in the International Monetary Fund's (IMF) Policy Development and Review Department and was active in staff formulation of IMF policies. Mr. Lachman has written extensively on the global economic crisis, the U.S. housing market bust, the U.S. dollar, and the strains in the euro area. At AEI, Mr. Lachman is focused on the global macroeconomy, global currency issues, and the multilateral lending agencies.
  • Phone: 202-862-5844
    Email: dlachman@aei.org
  • Assistant Info

    Name: Emma Bennett
    Phone: 202.862.5862
    Email: emma.bennett@aei.org

What's new on AEI

image Recovering from tax time blues
image 10 welfare reform lessons
image Let HHS nominee Sylvia Burwell explain Obamacare lie
image Why bold ideas backfire in politics
AEI on Facebook
Events Calendar
  • 14
    MON
  • 15
    TUE
  • 16
    WED
  • 17
    THU
  • 18
    FRI
Wednesday, April 16, 2014 | 10:00 a.m. – 11:00 a.m.
Calling treason by its name: A conversation with Liam Fox

Join us at AEI as the Right Honorable Liam Fox sits down with Marc Thiessen to discuss and debate whether America’s intelligence agencies have infringed on the personal privacy of US citizens.

Event Registration is Closed
Thursday, April 17, 2014 | 4:00 p.m. – 5:00 p.m.
The curmudgeon's guide to getting ahead

How can young people succeed in workplaces dominated by curmudgeons who are judging their every move? At this AEI book event, bestselling author and social scientist Charles Murray will offer indispensable advice for navigating the workplace, getting ahead, and living a fulfilling life.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.