I agree with Stanley Fischer that ... the IMF.... promotes good macroeconomic and financial-sector policies among its members. But my reading of the record is that on structural policies the Fund has bitten off more -- in both scope and detail -- than either it or its member countries can chew. Among the alternative crisis management guidelines, the one that would have the Fund focus on macroeconomic and financial stability and assist a country not only to get out of its current crisis but also to minimize the chances of getting into another one makes the most sense to me. Conditions that lie outside the core areas of monetary, fiscal, exchange rate, and financial-sector policies should be significantly fewer in Fund programs than the average of the past five years and should require strong justification.
I also read the record as suggesting that the effectiveness of Fund structural conditionality would be increased if a small number of structural performance criteria were substituted for the vast array of benchmarks. Last, streamlining and improving Fund structural policy is about Fund management saying no more often than in the past -- to requests for Fund assistance where the expectation is low that the country will actually implement Fund policy conditions, to G-7 governments when they propose new tasks for the Fund that go beyond the Funds core competence, to NGOs who seek to use a countrys letter-of-intent with the Fund to advance agendas (even if desirable) that lie outside the Funds mandate and comparative advantage, and to developing-country finance ministries that want to use micro conditions in Fund programs to impose spending discipline on other government ministries that could not be obtained via their national legislatures.
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