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April 11, 2008

Exhibit B in non-permanence of neoliberalism: IMF is dead

After the demise of Fast Track this week, Exhibit B shows again how movable the neoliberal institutions are. From the FT earlier this week:

The board of the International Monetary Fund voted on Monday to cut 15 per cent of its staff and sell about $11bn (€7bn, £5.5bn) in gold reserves in one of the biggest shake-ups of its funding since it was founded.

The IMF plan to cut 380 jobs and sell 403.3 tonnes of gold, about an eighth of its reserves, still has to be approved by other authorities...

“We think it is time to retool and move away from pure lending towards a business model that offers a group of experts to help countries adopt the right policies,” the IMF said.

You can just smell the spin when a LENDING institution claims it's going to be doing a mite less lending, and instead be a stable for otherwise unemployed experts. In fact, as friends who have worked at the IMF tell me, all of the IMF's economists are here on work visas. Some of them have been here 20 years, and have houses in Silver Spring, and kids at Sidwell Friends. If they're fired, they must go home.

But what's a deported Malawian central banking expert to do back home? Well, the Malawian central bank or government might be a good place to drop off a job application. But tragically, after 30 years of IMF structural adjustment, there isn't much of a government left to go back to. Indeed, thanks to the stunning success of the IMF at shrinking the size of developing country governments to the size where you can drown them in a bidet, neoliberal economists have made themselves unemployable.

The IMF's financial difficulties comes from the fact that it has no more borrowers. Latin Americans got peeved and created their own Bank of the South. Asians got peeved and decided to just hoard ever greater dollar reserves on their own (contributing to our own current account problems, but that's for another time.) Currently, Turkey accounts for most of the IMF's lending portfolio. As Mark Weisbrot and Erinc Yeldan showed a few years ago, this hasn't been particularly good for Turkey. And then, this happened:

Turkey's economy can withstand global economic turmoil, Economy Minister Mehmet Simsek told Reuters, to the point that a new IMF stand-by agreement is not needed and is indeed "unlikely."

Oh, well. Despite the IMF chief Dominque Strauss-Kahn''s declaration this week that "the IMF is back," it's pretty clear that it's down for the count. One down: two to go (WTO and World Bank - both are in critical condition.)

If you're in DC this weekend and would like to participate in some of the civil society events planned, the Bank Information Center has a webpage that is a great resource.

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Comments

Rudi

Great post, Todd.

As you're citing Weisbrot/Yeldan, here's some more recent research, related, even if not directly on IMF, led by Epstein/Yeldan. See policy brief #14 on http://www.g24.org/briefs.htm, and the full journal here: http://www.informaworld.com/smpp/title~content=g791557241~db=all

Rudi

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