A Strong IMF Benefits All
The White House wants to pump another $18 billion into the International Monetary Fund to bolster its resources and offer immediate aid to ailing Asian economies. Now supporters in the House and some dubious voters are asking why. Eighteen billion dollars is not a figure tossed about lightly, but this investment should be seen as an effort that will pay dividends in the long term. America remains strong by keeping strong company.
The congressional struggle came into focus Monday when the IMF lent Indonesia another $1 billion to try to steady its reeling economy, by far the worst-hit in the Asian financial crisis. Critics raise questions when the IMF is suddenly dealing in billions, as was the case for the 1995 Mexican peso bailout, led by Washington and the IMF.
Certainly the global economy of the 1990s, with its massive flows of capital and trade, poses challenges of far greater magnitude than in 1947, when the IMF was created to help prevent economies in crisis from threatening the stability of the global financial system.
The Asian crisis has depleted the IMF’s treasury by more than $100 billion, but those loans can also be seen as an investment in buoying and balancing the world economy. Many of our leaders were not born in the 1930s, but they should not need a history lesson to recall what happens when the world’s economy goes sour.
The Clinton administration and the Senate support additional IMF funding. House Democratic Leader Richard A. Gephardt of Missouri is championing the IMF cause in the House, but he is holding together a fragile coalition of Democratic support. Some of his fellow Democrats want a full and separate debate on reforming the IMF after they approve the $18 billion that the administration is requesting. They want reassurances from Clinton that a debate including labor and environmental issues will be held.
The IMF is far from perfect. It failed to anticipate the problems in Indonesia and elsewhere in Asia, but what country didn’t? The IMF remains a useful economic tool for Washington and its allies. It is funded by subscriptions from 182 member nations, which keep a share of their national currencies on deposit with the IMF. The existing usable pool for loans--dollars, German marks, Japanese yen and other major and readily exchangeable currencies--needs to be increased now. Asia is not out of its economic straits. IMF support is an investment in America’s shared future with its allies.