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International Monetary Fund defends its handling of the Asian economic crisis.



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PETER CAVE: The International Monetary Fund has mounted a strong defence of its handling of the Asian economic crisis at a conference of Finance Ministers and bankers from 180 countries in Washington.  Some governments and financiers have not hidden their view that the World Bank and the IMF are dinosaurs no longer equipped to deal with a modern-day financial crisis.

 

But, as Agnes Cusack reports, the IMF’s Managing Director, Michel Camdessus, has hit back at such criticisms and has had some harsh words for Japan and Indonesia in his opening speech.

 

AGNES CUSACK: The head of the International Monetary Fund, Michel Camdessus, was ready when asked if the bureaucratic nature of the IMF makes it impossible to respond quickly to crises like the recent financial meltdown in Asia.

 

MICHEL CAMDESSUS: I will not apologise at all to be a bureaucrat and I will tell you my  …  to be here at the head of the most magnificent bureaucracy of the world.  And if you find one which serves better the common good, please tell me.  We will try to follow its example.

 

AGNES CUSACK: Michel Camdessus, who came from the Bank of France to the IMF in 1984, is playing host to Finance Ministers and central bankers from 180 countries in Washington this week.  Their mission is to design what’s being called a new architecture for the international financial system.  The IMF has come under fire from US Congressmen who are holding out on money for the fund and other policy makers around the world for its handling of the Asian crisis.  They believe the IMF and the World Bank created to sort out the economic turmoil left by World War II have scarcely changed since then and are no longer equipped to face the challenges presented by the globalisation of capital markets.

 

In their defence, the international money lenders argue they need stronger surveillance mechanisms to provide more information on world economies and so give them more teeth.

 

The IMF issued its predictions for world growth yesterday, and today Mr Camdessus was on the attack.  The Japanese Government has objected to IMF predictions of zero growth this year.

 

MICHEL CAMDESSUS: We have produced for Japan a professional guess of zero growth for this year, but we would love to be wrong and to find in the package of the Minister, when we will have all the details of this package, elements for changing this number in something significantly more positive.

 

AGNES CUSACK: He told Japan it must be an engine of growth for Asia and should do more to open its markets to the world.  And on Indonesia, the IMF head said the country would pay a heavy cost if it again rejected the IMF’s multibillion dollar rescue package.  Mr Camdessus said he didn’t believe that would happen.

 

MICHEL CAMDESSUS: In the Indonesian environment, everybody knows pretty well this kind of reform does not go easily and that vested interests can permanently conspire to let’s say delay it, if not sabotage it, and that you must start and start again and start again.  But why do I believe that the Indonesian authority will stick to it now?  Well, because they know pretty well the cost of not having accepting and adhering to it earlier.

 

AGNES CUSACK: The Australian Treasurer, Peter Costello, and head of the Reserve Bank, Ian Macfarlane, have arrived in the United States for the IMF World Bank meeting.  This is Agnes Cusack in Washington for AM.