Crisis or no crisis, stay clear of IMF

Editorial, NewAge, February 15, 2009

TRUE to speculations by different quarters, the Bangladeshi economy appears more or less insulated from the raging global financial crisis. At least, as of yet, domestic trends do not reflect a strong impact on the economy due to the financial fallout elsewhere in the world. While experts and economists have speculated about the likely impact on Bangladesh, these speculations have been isolated and based on whatever information was available to them. From that perspective, a government taskforce to assess the likely impacts and probable strategies to overcome the global crisis is a good idea. Although the suggestion of such an assessment exercise, comprising different stakeholders and sponsored by the government, has been in circulation for quite some time, the taskforce is yet to be set in motion. It may very well be that Bangladesh would face some adverse impacts in terms of exports earnings or lower remittance as consumption and demand for services decrease across the world. This assessment exercise, however, either through a taskforce or through commissioned studies, must not be conducted merely to justify further financial assistance from the International Monetary Fund or the World Bank.
   

As a report published in New Age on Friday, indicates, the assessment of likely risks might well turn out to be the prelude to another financial arrangement with the IMF since the last one under the Poverty Reduction and Growth Facility has expired. The possibility, as it was mentioned during a press conference after a meeting between the government and a visiting IMF delegation, would certainly be heartening for the multilateral lending agency that appears to thrive during financial crises such as the present one. It was during the Asian crisis of the 1990s when a number of countries had to turn to this lending agency for funds as they were facing liquidity crunch and were bound to follow the disastrous prescriptions issued by the agency.
   Not only were those prescriptions almost opposite to what developed countries are doing to counter the crisis, but countries that pointedly refused to fall in line and followed their own strategies weathered the crisis much better than those who conformed to the prescribed measures. It is not a surprise then that the IMF has lost a number of large clients in the past several years. A number of its large clients, including Brazil, and Argentina, have paid back their debts earlier than scheduled and refused to renew their arrangement.
   

The lending agency previously made a bid to initiate a new programme with Bangladesh under its newly introduced Policy Support Instrument. Now that Bangladesh does not have any arrangements with the IMF, there could be further pressure for accepting its funds through a new facility, which would presumably stipulate an agreement to the policy support instrument programme. It would only mean that Bangladesh’s sovereignty over its development policies will be undermined. The government should, instead, look for other means to weather through any potential crisis that lies ahead and initiate concrete steps to dissociate itself from the clutches of multilateral lending agencies.

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