It is true that the Fund has created a loan window called the "flexible credit line." Johnson may have been referring to this window in his interview. The Fund claims that it does not impose conditions on countries that borrow from the F.C.L. window. On the other hand, "the FCL is for countries with very strong fundamentals, policies, and track records of policy implementation and is particularly useful for crisis prevention purposes. FCL arrangements are approved for countries meeting pre-set qualification criteria."
What are these criteria?
(i) a sustainable external position; (ii) a capital account position
> dominated by private flows; (iii) a track record of steady sovereign access
> to international capital markets at favorable terms; (iv) a reserve position
> that is relatively comfortable when the FCL is requested on a precautionary
> basis; (v) sound public finances, including a sustainable public debt
> position; (vi) low and stable inflation, in the context of a sound monetary
> and exchange rate policy framework; (vii) the absence of bank solvency
> problems that pose an immediate threat of a systemic banking crisis; (viii)
> effective financial sector supervision; and (ix) data transparency and
> integrity. Strong performance against all these criteria would not be
> necessary to secure qualification under the FCL, as compensating factors,
> including corrective policy measures under way, would be taken into account
> in the qualification process.
>
In other words, now the country itself must have already liberalized of its own accord before the Fund can be approached for a F.C.L. loan. Therefore, the Fund's hands are politically clean, so goes the theory. But in reality what has happened is that the status quo ante is preserved in Fund lending policy.
epoliticus
-- "In the tender annals of Political Economy, the idyllic reigns from time immemorial ... the present year of course always excepted." -- A German refugee, circa 1867 --
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