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According to him, their
main concerns now are (a) the rising inequality in the Philippines and
other Asian economies that have been growing rather fast recently, (b) unstable
macroeconomic fundamentals that can restrict potential growth, and (c) raising
public finance to develop human capital and public infrastructures.
Here is one of the charts
Singh showed in his talk. While inequality has stabilized in sub-Saharan
Africa, or declined in the Middle East and North Africa, as well as in Latin
America, inequality in the Philippines and other Asian economies has increased.
Another slide he showed pertains to the difficulty of doing business in the country -- with the Philippines ranking in the 140s globally -- and the low level of public investment in infrastructure as seen from the country's low infrastructure score.
During the
open forum, I asked Singh two questions. The first is: Has the IMF become
irrelevant to many Asian economies? Its focus on solving inequality and
inadequate public spending on education and healthcare betrays a shift away
from the lender's original mandate of helping countries suffering from balance
of payments (BOP) difficulties.
The IMF was organized in
1945 to “promote international monetary cooperation… facilitate the expansion
and balanced growth of international trade… promote exchange stability and
avoid competitive exchange depreciation… assist in the establishment of a
multilateral system of payments… and in the elimination of foreign exchange
restrictions which hamper the growth of world trade… give confidence to members
by making the general resources of the Fund temporarily available to them under
adequate safeguards… (and) shorten the duration and lessen the degree of
disequilibrium in the international balances of payments of members.” This is
contained in the Articles of Agreement of the IMF, Article I.
There is hardly any BOP
difficulty in Asia these days , making the region the envy of the US and the
EU. In fact, in the wake of the Asian financial crisis of 1997-1998, the Asean
and its three biggest neighbors -- China, Japan and Korea -- organized the
Chiang Mai Initiative, which pooled money that any signatory to the
agreement can draw from in case of BOP problems.
In the case of the
Philippines, it no longer owes the IMF, having graduated from the lender's
fiscal and macroeconomic tutelage a few years back. On the contrary, the
Philippines lent $1 billion last year to the IMF to help the EU address its
fiscal difficulties.
So if the problem is back
in the US and the EU -- the so-called developed regions that organized the IMF
and two other institutions at Bretton Woods after the Great Depression -- the
million-dollar question is why the IMF persists in sending "experts"
to countries like the Philippines to pontificate about issues we already know
about and the solutions to which have been discussed ad naseum?
In the same vein, is it
wise for the Philippines to lend money to the IMF so it could maintain a
representative in the country? Why pay so much for a bureacrat, especially when
talking can be done more efficiently, if not effectively, over the Internet?
In his reply to my query,
Singh said addressing social inequality can help economies sustain their growth
through a more productive labor force. Sounds like someone from the World Bank
or the Asian Development Bank (ADB), right?
This betrays more than just
irrelevance on the part of the IMF in so far as countries like the Philippines
are concerned. If you check the IMF website, then you'd
discover that the lender has adopted the same line as that of the World Bank
and ADB: "To foster global monetary cooperation, secure financial
stability, facilitate international trade, promote high employment and
sustainable economic growth, and reduce poverty around the world.”
Now this raises the issue
of redundancy, which was the second question I raised during last Wednesday's
forum. The IMF's fellow Bretton Woods institution, theWorld Bank was
organized precisely for that: “Our work is challenging, but our mission is
simple: Help reduce poverty.”
As for the ADB: “The ADB aims for an Asia and Pacific
free from poverty… alleviate poverty and help create a world in which everyone
can share in the benefits of sustained and inclusive growth.”
Perhaps it's time to
dismantle the IMF? Enough said.
------------See also:
Foreign Aid 2: Circuitous and Leaky Process, November 03, 2005
Foreign Aid 6: IMF is Engineerable and Abolishable, September 05, 2006
Foreign Aid 8: Abolish the IMF, August 08, 2007
IMF socialism, January 04, 2009
IMF dinosaur, let it fade away, June 16, 2009
Fiscal Irresponsibility 26: On the $1 B Philippine Loan to the IMF, June 27, 2012
Fat-Free Econ 15: IMF and Freedom From Debt, July 01, 2012
Fat-Free Econ 38: Jobless Growth vs. Jobless Non-Growth, February 12, 2012
Fat Free Econ 39: P57,000 Public Debt Per Filipino, February 25, 2013
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