by bowing to the UK’s pressure, the Fund undermined its only real asset – its independence. The IMF has dodged responsibility for far more serious forecasting errors, including its failure to anticipate every major crisis of the last generation, from Mexico in 1994-1995 to the near-collapse of the global financial system in 2008. Indeed, in the 6-12 months prior to every crisis, the IMF’s forecasts implied business as usual. Moreover, in choosing to flatter the UK’s misguided policy, the Fund has confirmed its deference to its major shareholders. For years, the view has been that the IMF is a foreign-policy instrument of the United States. The softness in its annual surveillance of UK economic policy has also been well known. But in taking this latest step, the Fund has undermined – perhaps fatally – its ability to speak “truth to power.” If so, a fundamental question may well become unavoidable: Why does the IMF exist, and for whom?
Posted on: Sat, 14 Jun 2014 12:14:46 +0000