Asia vows to resist deeper IMF, WB involvement

Singapore, September 19 :

Asian countries vowed on Tuesday to resist deeper involvement by the IMF and the World Bank in their national economic policies and insisted on taking charge of the anti-corruption fight.

Ten years after a financial crisis that saw the bitter economic pills tied to International Monetary Fund loans come under heavy criticism, Asian nations want to chart their own courses, restricting intervention by the twin financial institutions, both based in Washington.

Indonesian finance minister Sri Mulyani Indrawati said the World Bank and IMF must act as “partners, not preachers” and stop sending teams from Washington to find problems and prescribe solutions.

She also said in remarks at the IMF and World Bank annual meetings in Singapore that the institutions should refrain from attaching narrowly defined conditions to assistance.

While IMF and World Bank experience can help, “the era is over when big missions are needed to fly out from Washington to diagnose our problems and suggest solutions all within two weeks,” Indrawati said.

Asian nations generally welcomed the World Bank’s efforts to fight corruption and improve governance, but they stressed that they themselves should have a major say. “Strong country ownership and consistent and equal treatment across member countries must, however, remain the guiding principles for implementing governance and anti-corruption assistance framework,” said Salman Shah, who represents Pakistan on the Bank’s board of governors.

Nor Mohamed Yakcop, who represents Malaysia in the World Bank and IMF, said “it is important for the Fund and the Bank to adopt an open approach in its engagement” with so-called middle income countries to “synergize” each other’s expertise.

“In this regard, countries should be allowed greater flexibility in determining policy priorities and options in charting their own development paths,” he said. Indonesia’s Indrawati said the Bank and the IMF should improve grassroots involvement. “We need more people on the ground, who can work with us, side by side, at our pace, meeting our deadlines and facing our pressures,” she said.

“If you want to help us improve governance, start by changing the way the Bank works on the frontlines.” She said that if the Bank wants countries to be open about corruption it needs to be more transparent about its graft investigations.

The IMF’s initiatives to strengthen the financial surveillance process also got a cautious response, with India’s Finance Minister Palaniappam Chidambaram insisting that the IMF remain focused on its area of core competence, marcoeconomic analysis.

“Given the persistent perception of a sigificant section of members that the Fund’s surveillance is not ‘even handed’, we should use this opportunity to restore confidence among both borrowers and lenders,” he told the meeting.

Chidambaram said a “one-size-fits-all” approach to Fund surveillance was not feasible as each country has its own political, social and institutional realities.

He said the World Bank’s anti-corruption plan, which seeks to link assistance to a recipient country’s commitment to sound governance and anti-graft measures, “must be further developed with the full involvement of and oversight by the (Bank) executive board.”

Asian countries also called on developed nations to limit their claims for higher quotas in a second phase of planned IMF reforms over the next two years to allow more developing economies to increase their voting rights.

The IMF on Monday approved the first stage of sweeping reforms that gave increased quotas to China, South Korea, Turkey and Mexico.