THE INTERNATIONAL Monetary Fund has conceded it made mistakes in the Asian financial crisis. A report concludes that in the main its policy prescriptions towards South Korea, Indonesia and Thailand were correct, but there was a crucial flaw: the IMF assumed its programmes would rapidly restore market confidence, and they did not.
"However, in the event, the programmes and their initial implementation did not restore confidence quickly enough, capital accounts were much less favourable than assumed and so the reverse happened," says the report.
The Fund also conceded it may have misjudged calls for government spending cuts. But it defended calls for rapid monetary tightening, saying that only this could restore currency stability and head off inflationary spirals.
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