IMF Reform Panel Upset With Clinton

By HARRY DUNPHY, Associated Press Writer

WASHINGTON (AP) - The head of a congressional advisory committee on reforming the International Monetary Fund and the World Bank said Tuesday the Clinton administration's response to its proposals was disappointing.

Economist Allan Meltzer of Carnegie Mellon University, who headed the committee, said Treasury officials did not agree with many of the panel's conclusions. It recommended limiting the IMF to short-term emergency loans in financial crises and getting the World Bank to focus on development grants to poor countries instead of making loans.

Testifying before the Senate Foreign Relations Committee, Meltzer said he was ``disappointed and disheartened by the Treasury's response,'' particularly to proposals for the IMF to lend only to pre-qualified countries no matter what kind of financial crisis the world was facing.

Speak your mind Discuss this story with other people. [Start a Conversation] (Requires Yahoo! Messenger)

The pre-conditions would require countries over a five-year phase-in period to strengthen their financial systems, improve their fiscal or budget policies and provide timely information to markets about their outstanding debt.

Treasury officials, Meltzer said, ``have agreed the conditions are desirable but have spoken repeatedly about how only a small number of countries would adopt the conditions,'' Meltzer said.

In fact, Meltzer said, 50 countries or one-third of the IMF membership already meet one of the most difficult conditions- requiring full access of foreign financial institutions to the country's markets.

Another committee member, Charles Calomiris, a professor of finance at Columbia University, said opponents of the Meltzer Commission report want the reformers to go away because more is involved than sound economic policy.

``Behind closed doors, critics are candid about their primary reason for objecting to our policies: 'Forget economics; it's the foreign policy stupid,' '' he said.

Calomiris cited IMF loans to Ecuador as an example using the institution for political purposes.

These loans are ``best understood as a means of sending political payola to the Ecuadoran government at a time when the United States wishes to ensure continuing use of its military bases there for monitoring drug traffic,'' he said.

The Clinton administration has put forward a package of proposals to overhaul lending activities at the World Bank and IMF in an effort to blunt a congressional drive for more radical change. But these proposals do not go as far as the Meltzer committee's recommendations.

What motivates your spending? Click here to find out!

Related Quotes DJIA NASDAQ S&P 500 ^IIX ^PSE 10794.76 3813.38 1477.26 490.27 1095.13 +142.56 +230.88 +28.45 +41.89 +56.31