Doug Bandow

This selection first appeared in Fortune on 25 May 1998. Doug Bandow is a senior fellow at the Cato Institute in Washington, D.C., and a former special assistant to President Ronald Reagan.

SYNOPSIS
Bandow asserts that the main push for U.S. funding of the IMF comes from American businesses because IMF loans are "a backdoor method of seeding foreign economies with money to buy U.S. goods." According to Bandow, these businesses would be the only losers if we ceased the operations of the IMF.

For Bandow, countries that have received loans from the IMF, or might receive loans in the future, would be better off without the IMF. The IMF "has long impeded economic growth in poorer countries, and its new penchant for bailouts is likely to further slow reform…" The reason for this is that the Fund's conditions for its loans usually focus on narrow accounting measures - such as currency devaluations - that "often bring borrower's economies to a halt."

Bandow cites other reasons for "killing" the IMF:

• The are shamelessly eager to lend.
• Their conditions are never enough.
• The IMF doesn't create resources, it only reshuffles them.
• They don't aid the reform process and often subsidize inefficient and corrupt political systems.

Finally, Bandow refutes the argument that there is "no alternative" to the IMF by asserting that "unsubsidized economic failure" would impose a far tougher discipline than IMF conditions do and would force countries to "adopt all the changes necessary to reassure foreign bankers and investors."

As Bandow sees it, "financial crisis requires economic reforms, not IMF loans."

For the full text of this article please see "Kill the IMF" in the May 25, 1998 issue of Fortune or the book The International Monetary Fund -- Financial Medic to the World?.