C. Rakesh,
Not to defend the IMF, but I think their concern (however perversely they pursue it) ultimately boils down to trying to make a country's money have real, predictable value. Whatever other bullshit they may drone on about, the anti-subsidy bent is an effort to take the vagaries of government policy out of a country's credit and bond markets. It is legitimate (to the extent that word can be used here) to say that expansive fiscal policy undermines the value of credit-money, especially when it is very large in relation to GDP and local credit institutions are not well developed.
Yet if that's true, it's been obvious to me that the IMF is talking to the wrong people. It's not the fault of subsidizers that they are needed (although let's face it, "subsidy" is often synonymous with "payoff" and "kickback" in the third world). It's the fault of typical cowardly, complacent capitalists who would rather run a racket than make the effort to engage in legitimate commerce. Consider Indonesia. You may not be an expert and I'm sure I'm not, but which do you think is more responsible for the turmoil in the rupiah, rice subsidies or billions in loans made to Suharto cronies who do nothing but sit around and jerk off? I'll take a flyer at that one.
If the IMF was serious and had gut one, they would slap these half-wit neo-bankers around who are ruining the third world. They talk transparency and good standards, but then they give the tranches to the central banks who are clearly the captives of these cronyists if not their head collaborators (note recent Russian revelations). The IMF could easily become a de facto central bank for these work-out situations if they had the interest or the nerve. Instead, they bluster around and scare the politicians while effectively kowtowing to the lowest of low-brow capitalist hacks. The IMF, after all, has the capacity to lend real money (marks, sterling, dollars) while the central banks are pumping out phony paper that the banks are just going to turn around and buy hard currency with. If the point is to make the credit system solid, the IMF should step in and make it solid. I think the IMF are being fascists because they are too stupid and weak to be good capitalists. They beat up on these little governments because they are a bunch of self-important bureaucrats with a captive audience.
peace