Wednesday, August 08, 2007

Foreign Aid 8: Abolish the IMF

Prof. Christopher Lingle of Center for Civil Society India, published an article in the Financial Express in India entitled "Shut down the IMF"
http://www.financia lexpress. com/news/ Shut-down- the-IMF/208206/.

He wrote,
By claiming that the International Monetary Fund (IMF) promotes free enterprise capitalism, Left-wing commentators are on record for closing it down. Considering the IMF's record, though, one has to be hooked on hallucinogenic drugs to believe it holds a corporate view in support of economic fundamentalism. As it is, governments seeking financial support from the IMF with large budget deficits are instructed to increase the tax burden to reduce shortfalls in public revenues. It defies logic to suppose that giving the government more control over the economy, thus, promotes free markets. But then, Leftist critics are not always responsive to facts.
"Having said that, there are good reasons to shut down the IMF. On the basis of current circumstances and its ongoing operations, global financial flows would almost certainly be no worse off if the IMF were abolished. Indeed, it is more likely that global markets would work better without it. Founded in 1945, the IMF was charged with fostering economic stability by providing emergency loans to members having trouble financing their balance of payments. But the financial system it was designed for began vanishing in 1971 when the gold standard ceased to exist....

Yes, I also believe the IMF should be abolished. Last week or 2 weeks ago, IMF Managing Director (and former Spanish Finance Minister) Rodrigo de Rato came here in the Philippines. He talked mainly, as expected, "more government revenues, fix your fiscal deficit, improve tax collection,..."

Well, what else can you expect from international bureaucrats who live off on taxes? Without high taxes, those international bureaucracies like IMF, UN, WB, ADB, OECD, will have little or zero resources to sustain them.

In fairness to Mr. de Rato, he did not push for "new or higher taxes" for the Philippines. He only urged "better tax administration", meaning improved collection from existing tax laws and tax rates. Of course he's aware that the Philippines has among the most number of business taxes in the whole of Asia, in the whole world. He knows the existence of WB-IFC joint annual study, "Doing Business".

Last week, or perhaps weeks before, the Office of the President, through the Bureau of Internal Revenue (BIR) and possibly, along with the Dept. of Transportation and Communication (DOTC), publicized their plans to hike the "common carriers' tax" for public transportation by something like 2,600%(!). I do not know if this was related to Mr. de Rato's visit, or to plug in additional revenues from the never-say-die budget deficit of the country. Naturally the public transport sector players raised howl, and immediately filed a petition for fare increase for commuters of public transportation (jeepneys and buses, taxis). Seems that public opposition was stronger than the national bureaucrats' thirst for more blood and sweat from the citizens, the proposal was tentatively shelved. Until the vigilance recedes later perhaps, and the government will just suddenly ram up those new tax hikes.

International bureaucracies like the IMF, along with annual and bi-annual meetings of clubs of governments, like ASEAN + 6 summit, ASEAN ministerial meetings, APEC summit, etc., are very costly to taxpayers. That is why the Office of the President and the Department of Foreign Affairs (DFA) do not reveal to the public how much those meetings where the country hosted, cost us taxpayers.

The lesser we have of those international bureaucracies and summit, the better for us. Until governments will just create new clubs and regular meetings among themselves. Ewwww!

See also:
Foreign Aid 4: Easterly vs. Sachs, May 01, 2006
Foreign Aid 5: Failure in East Timor, May 31, 2006
Foreign Aid 6: IMF is Engineerable and Abolishable, September 05, 2006
Foreign Aid 7: Wolfowitzoellickation of the WB, May 30, 2007

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