IMF

The IMF may have acted as a crisis manager and crisis lender but it lacks the very basic attribute of a lender of last resort, which is the political and legal prerogative to create high-powered money without limit. Further, the entire spirit and intent of the Fund's policy on use of its general resources is to encourage early recourse to its financial facilities and to ensure that liquidity crises do not develop into solvency crises.

Theory offers a number of plausible benefits from international financial liberalisation. However, a careful examination of available empirical literature on the subject suggests much less reason to be sanguine about the benefits. In view of the widelynoted concerns regarding short-term indebtedness, a strong case can be made for the setting of prudential limits on the amount of short-term debt that a country can accumulate. Somewhat less clear is what steps need to be taken to reduce vulnerability due to uncovered long-term foreign currency borrowing.

In the post-cold war world, issues of equality and social justice still remain vital concerns. As the increasing gap between rich and poor countries, and the growing desperation of the poor and the unemployed reveal, market economy is not an all-encompassing panacea and it thus becomes necessary to find an alternative. It is here that civil society and the local community must have the space to act and where necessary even solicit the state's intervention - a moving idea behind those protest movements seen earlier this year. The challenge of the new century is to bring these ideas together in a new consistent design, towards a "mobilisation against globalisation" through which a more humane and equitable economic and social order will possibly take shape.

What one expected from the Report of the Advisory Group set up by the Reserve Bank of India (RORB) to assess conformity to the guidelines specified in the IMF's Fiscal Code was an in-depth exploration of compliance, beneath the formal provisions in place. The peculiar genius of Indian misgovernance is that, while complying with transparency requirements in a superficial sense, there are enough exceptions and anomalies tucked away in the system for it to achieve obfuscation to an impressive degree. The Group was advantageously placed in terms of its membership to ferret out examples where there is de jure compliance, but none de facto. It does not do this. Further, the RORB is largely confined to compliance at the central government level. It does deal to some degree with inter-government issues between centre and states, but not with state-local issues.

The article delineates the IMF's rationale for its role in the international economy; particularly in helping those countries that are going through balance of payments crises. The authors attempt to decipher whether the actual lending pattern of the IMF conforms to this rationale. This is done in the context of panel data models for several groups of countries. There appears to be some arbitrariness in the lending pattern of the IMF.