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IMF economist Rogoff says fund should act as `whistle-blower`
Washington, Aug 19: The International Monetary Fund needs to take a more active role pointing out nations` bad economic policies or risk becoming obsolete, even if it means triggering a crisis, said Ken Rogoff, outgoing chief economist of the international lender.
Washington, Aug 19: The International Monetary Fund needs to take a more active role pointing out nations' bad economic policies or risk becoming obsolete, even if it
means triggering a crisis, said Ken Rogoff, outgoing chief economist of the international lender.
"The IMF would be moving in the right direction if it did a little less cheerleading when debts were building up and a little more whistle-blowing," Rogoff wrote in the September issue of finance & development, an IMF magazine.
The report said in late 1990s the IMF underestimated vulnerabilities of banking systems in Korea and Indonesia, triggering economic contractions of as much as 13 per cent. Rogoff said the IMF faces the challenge of having to report to its 184 member governments, "none of whom would look kindly on having the IMF surveillance trigger a potentially politically destabilizing crisis in their own country," he said.
Rogoff said the increased candor would ultimately create stability in markets and boost investor confidence. "If the IMF never acknowledges problems until they are too deeply rooted, it will also risk becoming irrelevant," he wrote. Rogoff said the candor should apply to all countries, including industrial ones.
Bureau Report
The report said in late 1990s the IMF underestimated vulnerabilities of banking systems in Korea and Indonesia, triggering economic contractions of as much as 13 per cent. Rogoff said the IMF faces the challenge of having to report to its 184 member governments, "none of whom would look kindly on having the IMF surveillance trigger a potentially politically destabilizing crisis in their own country," he said.
Rogoff said the increased candor would ultimately create stability in markets and boost investor confidence. "If the IMF never acknowledges problems until they are too deeply rooted, it will also risk becoming irrelevant," he wrote. Rogoff said the candor should apply to all countries, including industrial ones.
Bureau Report