Wanted: A Visionary to Transform the IMF
John Taylor (“Choice of new IMF head must not be dictated by the old EU order”, August 12) points out that the International Monetary Fund needs new leadership from outside the European bloc to address the multiple challenges facing the world today. As I have spent a considerable part of my professional life in opposing the outdated convention that a European leads the IMF while an American heads the World Bank, I think that the job should go the person who could usher in a fundamental change in the fund’s policy outlook besides restoring its credibility.
There is a long list of failed IMF structural adjustment programmes in the developing world, right from the early 1980s. There is perhaps no other international organisation that has aggressively pushed the neoliberal agenda of deregulation, privatisation, and liberalisation along with harsh austerity measures through its loan conditionalities.
The IMF’s policy advocacy for fiscal consolidation has often resulted in increased income inequalities in borrowing countries, while its pursuit for capital account liberalisation has made emerging markets more vulnerable to the risks associated with volatile capital flows. In recent years, the fund has changed its rhetoric on inequality and the use of capital controls, but there has been no significant change in its operations and overall policy framework. As evident in its current Argentina programme, there is a huge gap between the rhetoric and actual IMF policies. It seems that the IMF keeps on repeating its past mistakes.
It is not correct to ascribe all the IMF’s policy mistakes to the nationalities of its managing directors. Nor is there any assurance that a non-European head would drastically change its policy advice and lending programmes. More than nationality, the ideological and policy visions of potential candidates also matter.
New Delhi, India
This letter appeared in Financial Times, August 14, 2019 (available at https://www.ft.com/content/508b8e22-bdbb-11e9-89e2-41e555e96722).