IMF's Sweeping Demands Signal Shift |
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May 3, 2010
With its €30 billion ($40 billion) loan program for Greece, the International Monetary Fund is back in the nation-building business.
With its €30 billion ($40 billion) loan program for Greece, the International Monetary Fund is back in the nation-building business.
During the global financial crisis, the IMF has worked hard to shed its reputation, produced by years of interventions in Latin America and Asia, as an international heavyweight that uses crises to ram through market-oriented reforms. The IMF has insisted in the current crisis that Eastern and Central European countries make sharp cuts in wages and pensions in exchange for IMF loans—deepening the recession in Latvia and Ukraine as a result—but it hasn't insisted on wholesale privatization, trade liberalization or the adoption of floating exchange rates, as it had in the past.
Indeed, when tiny Latvia rejected the IMF's advice to devalue its currency, the country was able to enlist European allies and keep its peg to the euro.
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