Letter: Pain for Asia

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Letter: Pain for Asia

Sir: The International Monetary Fund is uncharacteristically humble in admitting it underestimated the severity of the East Asian financial crisis ("Chaos in Far East", 22 December). Even its sternest critics would allow some leeway on the hazardous nature of predicting the future; however there is no excuse for not learning the lessons of the past.

In East Asia the IMF is imposing extreme deflationary measures, in part to secure payments to foreign creditors. The same approach characterised its intervention in Latin America during the debt crisis of the 1980s. Today unemployment and poverty levels are higher in the region than they were 15 years ago. Hardly a rescue, hardly a blueprint for success.

Your report quotes the IMF's chief economist as saying that "some people are going to feel pain of this adjustment". The crucial question is how much pain and who feels it.

The degree of austerity being prescribed by the IMF is unjustified by underlying economic conditions. These are not Latin American basket cases of financial profligacy.

As for who bears the pain. The IMF has created a "risk-free" environment for foreign investors. No pain for them. By contrast, ordinary people will suffer the pain of mass unemployment and declining public services. In Indonesia, a country with 20 million people below the poverty line, the IMF is imposing an extreme austerity package in the midst of drought and rising rural poverty.

It is time the IMF was brought to account for its actions. It is also time that those poor people who will bear the pain are given the same hearing as those on Wall Street.


Senior Policy Adviser