>Attack on IMF could lead to revival of Asian Monetary Fund
> ADB Institute paving way, with calls for alternative remedies
> By Anthony Rowley in Tokyo
> THE Tokyo-based Asian Development Bank
> Institute is mounting a frontal assault on the
> tactics adopted by the International Monetary
> Fund (IMF) in dealing with the Asian financial
>crisis,
> and is promoting alternative approaches which it
> claims would minimise economic damage caused by
> IMF prescriptions.
> Some believe that the move may herald a revival of
> Japan's earlier proposal for an Asian Monetary Fund.
> Financial crises of the kind that have erupted across
> Asia "are of a new nature and require new policy
> responses", declares the recently appointed dean of
>the
> ADB Institute, Masaru Yoshitomi.
> One of these is the provision of "credible emergency
> financing from official sources, with less strings",
>he
> says in what amounts to a direct challenge to tight
>IMF
> conditionality.
> In a report prepared since Mr Yoshitomi took the helm
> at the Tokyo-based research and training centre, IMF
> policies are blamed for turning Asia's financial
>crises
> "into something far more serious".
> It said the IMF approach led to "the collapse of real
> economic activity" through the mistaken application
>of
> "conventional policies" such as monetary tightening,
> fiscal consolidation, structural reforms and the use
>of
> exchange rates to influence output and expenditure.
> If different approaches had been adopted, such as
> "provision of ample liquidity and low interest
>rates",
> the severity of the crises could have been reduced
>and
> the impact on real economies minimised, argues Mr
> Yoshitomi.
> Instead, the IMF confused Asia's "capital account"
> crises, caused by massive international capital flows
> and a surfeit of short-term debt, with "traditional
> current account crises caused by factors such as high
> inflation, low savings and fiscal deficits", he says.
> The ADB Institute plans to take this message boldly
> into the "enemy camp" by making special
> presentations at this year's annual meeting of the
>IMF
> and the World Bank in Washington, as well as
> spreading the alternative gospel through a series of
> seminars and other presentations.
> Asian bureaucrats coming to the ADB Institute for
> training in monetary affairs will also be tutored in
>these
> non-orthodox approaches.
> The assertive posture being adopted by the institute
> matches the more independent line that the
> Manila-based Asian Development Bank (ADB) itself is
> pursuing under its recently-appointed president Tadao
> Chino.
> Mr Chino has, in effect, rejected the supremacy of
>the
> World Bank as the final arbiter of global development
> policy, and has called for "competitive pluralism"
> among development banks in deciding what
> approaches to adopt.
> Some analysts believe that the ADB Institute is
> likewise preparing to challenge the IMF's global
> prescriptions and to promote "development paradigms
> for Asia" in the monetary as well as in the
> development sphere.
> The ADB Institute has already challenged one aspect
> of IMF supremacy by securing a contract from Asean
> to conduct regular surveillance of member's
> economies, and is pushing now into other areas of
> IMF territory.
> Japanese officials admit that Tokyo's proposal for an
> Asian Monetary Fund put forward at the onset of the
> regional currency crisis in 1997 was not backed
> sufficiently by research, and that more formal
> groundwork needs to be laid.
> This is what the ADB Institute appears to be doing
> now. Its original dean, former Philippine finance
> minister Jesus Estanislao, resigned abruptly at the
>end
> of last year after just one year in office and Mr
> Yoshitomi was selected by the Japanese
> government-funded body to take his place.
> A former senior Japanese financial official with
> experience as an economist at both the IMF and the
> Organisation for Economic Cooperation and
> Development (OECD), Mr Yoshitomi is regarded as a
> heavyweight possessing the administrative and
> intellectual skills needed to establish the
>credibility of
> the ADB Institute as a centre for alternative
> development and monetary paradigms.
> He also has a prominent academic record, including
> that of being visiting executive professor at
> Pennsylvania's Wharton School.
> Eisuke Sakakibara, the high-profile Japanese
> bureaucrat who is credited with having devised the
> Asian Monetary Fund (AMF) plan, said last week in
> Australia that the AMF had been abandoned too
> easily.
> Some expect that Mr Sakakibara and others (including
> the ADB Institute) will now work to build an
> intellectual constituency for an Asian fund.
> Another policy instrument which the ADB Institute
> will push for under Mr Yoshitomi is the establishment
> in Asia of "collective measures to restore systemic
> currency stability, including joint interventions".
> Japan has been a lead player in promoting regional
> currency stabilisation agreements but these were not
> sufficiently well developed at the time when the
>Asian
> crises erupted to stave off collapses.
> Yet another plank of the institute's "new policy
> responses" to crisis situations is the "coordination
>of
> demand expansion by crisis-hit neighbours, rather
>than
> competitive devaluations or desperate interest-rate
> hiking".
> This, too, argues against having the IMF act in a
> firefighting role once crises have erupted. It
>favours,
> instead, formal economic and monetary cooperation
> frameworks among Asian countries, so that crises can
> be anticipated and forestalled.