Jim Saxton is an idiot and a reactionary. In the past he has opposed the sale of IMF gold reserves for the benefit of the developing countries (a measure first demanded by the leading developing countries in the G-24 during the seventies). He stated that the profits from the gold sales should return to the developed countries. I don't see much virtue in any of his arguments; I only see the greed of the (over-)developed world.
It is interesting in the statement you attached how Saxton mentions the quota increase debate of 1998, but like all reactionaries he does not talk about how quotas have actually been declining as a share of world trade. In essence the resources available for developing countries to adjust to balance of payments crises have continued to decline despite the much-touted increases in their quotas. Furthermore, while Saxton is quick to talk about "mission creep" at the IMF, he does not talk about how developing country assistance has had to be increased because the developed world refuse to make its share of adjustment or provide market access during periods of financial stress. Saxton is most perturbed by the fact that the IMF draws on the resources of the G-10; in essence he is opposed to even the trickle of wealth redistribution that is being carried out by the IMF for the benefit of the developing world. I guess Saxton will only be happy when the developing world is completely choked off from concessional lending and must resort to commercial markets to resolve problems that are a byproduct of international financial system.
I am extremely suspicious of his "grant" plan for the WB. It is not my area of expertise, but I would be very cautious if I were a representative of a HIPC country. I wonder if anyone on this list has read the fine print to that plan.
Opposition to the WB & IMF is not a sign of virtue per se.
Best,
Vikash Yadav Philadelphia, PA
-----Original Message----- From: owner-lbo-talk at lists.panix.com [mailto:owner-lbo-talk at lists.panix.com]On Behalf Of Doug Henwood Sent: Thursday, February 14, 2002 10:35 AM To: lbo-talk Subject: JEC on BWIs
[Saxton was on CNBC this morning, talking about the WB & IMF. He didn't really seem like he knew what he was talking about. But anyone who makes life difficult for the Bretton Woods Institutions is doing something at least partly virtuous.]
For Immediate Release
Press Release #107-70 February 14, 2002
Contact: Christopher Frenze
Executive Director
(202) 224-5171 STATEMENT OF CHAIRMAN JIM SAXTON REFORM OF THE INTERNATIONAL MONETARY FUND AND WORLD BANK
[...] A number of these issues relate to proposals for reform of the International Monetary Fund (IMF), an issue I have been involved in since the debate over the 1998 IMF quota increase legislation. In preparation for the 1998 debate, the JEC conducted an extensive research program on the IMF, resulting in a series of studies and hearings. This research concluded that the IMF was not financially transparent, it provided below market subsidized interest rates, and promoted moral hazard.
In addition, we found that IMF mission creep was reflected in its drift into lending for development and structural reform, often involving longer loan maturities or rollovers of existing loans. Committee research also found there was a lack of IMF accounting controls and lending safeguards that could result in misuse of taxpayer money. A number of other findings involved the IMF's heavy reliance on the G10 for resources, and the lack of meaningful financial support for the IMF by most of its members.
This research led to the introduction of the IMF Transparency and Efficiency Act, a version of which later became law as conditions attached to the IMF appropriation. This reform mandated much more IMF transparency and the use of risk adjusted interest rates in IMF bailouts. In the last few years, IMF operations have become more transparent, although its financial statements still lack transparency. Although the IMF has made some limited progress in the area of financial transparency, a former IMF research director has also noted "the need to improve the financial structure of the Fund in terms of transparency, efficiency and equity."
I would also like to note the President's Council of Economic Advisers' (CEA) statements endorsing reform of the International Monetary Fund (IMF). According to the recent CEA report, IMF liquidity loan "programs would appropriately involve short-term lending at penalty interest rates, to encourage and facilitate the borrower's quick return to private capital markets." This is very consistent with the findings of the Meltzer Commission as well as the Congressional mandates for IMF reform developed by this committee in 1998. A version of these transparency and lending reforms became law in 1998 as conditions attached to the IMF quota increase legislation. Thus Congressional actions already taken strongly support the Administration's position on needed reform of IMF lending programs.
The Administration's support for substantial grant financing of some World Bank activities is also very significant. This reform would offer the best approach to improving living standards and reducing poverty in the world's poorest nations. The traditional World Bank/IMF approach of saddling poor countries with loans they often cannot repay has failed. Moreover, the high failure rate of World Bank projects reflects a waste of resources that could have better been used to alleviate poverty.
In conclusion, we now have an Administration that is serious about needed reforms of the IMF and World Bank. Although change in these institutions will not occur overnight, consistent and steady advocacy of responsible reform will produce results that will limit moral hazard, curb international financial instability, and reduce the waste of resources to the benefit of many millions of people around the world.