RiesgoPas ESAN Julio de 2006

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Riesgo-PaísESAN Julio de 2006

• El FMI frente a sus criticas
• Krugman, Stiglitz, Sachs

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El papel del Fondo Monetario Internacional
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La sala de la junta ejecutiva del FMI en
Washington
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The IMFs Managing Director Rodrigo Rato
(04/2004) following Horst Köhler
(05/2000-04/2004)
Second Vicepresident and Minister of Economy and
Finance since May 1996. Studied law at the
Complutense University of Madrid from 1968 to
1971. Master in Business Administration at
Berkeley, University of California from 1972 to
1974.
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FMI El BANCO MUNDIALLas dos instituciones
hermanas

• FMI
• 2,700 empleados
• Union de crédito cooperativo con 184 países
  miembros que proveen de cuotas que alcanzan en
  total 300,000 millones de .
• Prevención de crisis y financiamiento a corto
  plazo de problemas temporales con la balanza de
  pagos
• Programas de estabilización económica.
• Asistencia técnica

• IBRD IFC IDA MIGA
• 10,000 empleados
• El Banco beneficia de su rating de Triple A para
  emitir bonos globales de largo plazo en el
  mercado de capitales
• IBRD financia reformas estructurales y políticas
  de desarrollo sostenible así como inversiones en
  infraestrucutura (75) PIB gt US1305
• AID financia países con PIB ltUS865 por más de
  35/40 años
• El capital del BM alcanza 184 billones de
  dólares.

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Que NO hace el FMI ...

• No subsidia el desarrollo económico en las
  naciones más pobres
• No es un banco central internacional que controla
  la econom ía global y que subordina a los
  gobiernos de los diferentes estados
• No es una organización política investida con un
  sello misionario de rectitud fiscal
• No obliga a sus miembros a la austeridad
  economíca

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Una asistencia financiera pragmática

• No hay un complot mundial en contra de ningún
  país
• No hay gobierno mundial en la sombra
• ?busqueda de una combinación óptima de
  financiamiento externo y ajuste doméstico para
  reducir el costo social del amarre al cinturón
  en caso de crisis de balanza de pagos

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el FMI es una institución cooperativa financiera

• Vigilancia de las políticas económicas
• Financiamiento temporal de la balanza de pagos
• Diseminación de información de datos
• Asistencia técnica servicios de asesoría
• Foro permanente para la colaboración
  internacional (Asamblea Anual con el Banco
  Mundial en Septembre de cada año)

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El papel evolutivo del FMI en la economía global

• promueve la cooperación sobre temas monetarios
  internacionales
• promueve la estabilidad en las tasas de cambios
• promueve la libre movilidad de fondos entre
  países
• apoya el libre intercambio y politica economica
  basada en el libre mercado
• acorta la duración y disminuye el grado de
  desequilibrio en la balanza de pagos
• suministra asistencia financiera temporal

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Les critiques (libérales) du FMI Henry
Kissinger  le FMI fait plus de mal que de
bien! 

• A la suite de lintervention du FMI dans la crise
  asiatique le capitalisme de marché reste le
  meilleur moteur de croissance économique et de
  hausse générale du niveau de vie. Mais la
  mondialisation exacerbe la disparité entre
  lorganisation politique du monde et son
  organisation économique. Par ses interventions
  stéréotypées, au nom de lorthodoxie du
  libre-échange, le FMI aggrave souvent
  linstabilité politique via des cures trop
  sévères et mal ciblées daustérité.
• Il faut transformer le FMI et encourager les
  capitaux investis à long-terme tout en protégeant
  les pays des capitaux spéculatifs avec une
  meilleure régulation et coordination
  internationales.
• (Source Le Monde/1998)

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Paul Krugmans view on economic crisis
Born in 1953 Ph.D. in 1977 from MIT. In 1982-3,
he worked at the White House for the Council of
Economic Advisors. Received the prestigious John
Bates Clark Medal in 1991. Currently at
Princeton. Krugman's main focus in economics has
been on international trade. He helped found the
"new trade theory", which deals with the
"consequences of increasing returns and imperfect
competition for international trade."
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Paul Krugmans view on globalization

• In the 1980s, openness to trade was widely
  believed to reduce the likelihood of financial
  crises.
• Today, growing global integration does predispose
  the world economy toward more crises because it
  creates pressures on governments to relax
  restrictions. Economies are doing better in good
  times but are far more vulnerable to sudden
  crises due to rapid capital flight. A best guess
  is surely that the ride will continue to be very
  bumpy for many years to come.

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Paul Krugmans view on Asias 1997-98 economic
crisis
The logic of catastrophe was pretty much the
same in Thailand, Malaysia, Indonesia and South
Korea. (Japan is a very different story.) In each
case investors--mainly, but not entirely, foreign
banks who had made short-term loans--all tried to
pull their money out at the same time. The result
was a combined banking and currency crisis a
banking crisis because no bank can convert all
its assets into cash on short notice a currency
crisis because panicked investors were trying not
only to convert long-term assets into cash, but
to convert baht or rupiah into dollars. In the
face of the stampede, governments had no good
options. If they let their currencies plunge,
inflation would soar and companies that had
borrowed in dollars would go bankrupt if they
tried to support their currencies by pushing up
interest rates, the same firms would probably go
bust from the combination of debt burden and
recession. In practice, countries split the
difference--and paid a heavy price regardless.
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Paul Krugmans view on Asias crisis
Was the crisis a punishment for bad economic
management? Like most clichés, the catchphrase
"crony capitalism" has prospered because it gets
at something real excessively cozy relationships
between government and business really did lead
to a lot of bad investments. The still primitive
financial structure of Asian business--too little
equity, too much debt and too much of that debt
consisting of soft loans from accommodating
banks--also made the economies peculiarly
vulnerable to a loss of confidence. But the
punishment was surely disproportionate to the
crime, and many investments that look foolish in
retrospect seemed sensible at the time. After
all, suppose that the United States, which
currently is pulling in overseas money at the
rate of about 300 billion annually, were to see
that inflow suddenly become a trillion-dollar
outflow (which, relative to the scale of the
economy, is what happened to Asia's crisis-hit
countries). How solid would America's financial
system look?
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Joseph Stiglitzs views
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Joseph Stiglitz

• Distinguished academic career on the faculty of
  MIT, Yale and Stanford
• Member of the Council of economic Advisors in the
  Clinton Administration in 1993 and later named
  Councils Chairman
• 1997 Senior Vice President and Chief Economist
  at the World Bank
• 2000 mounting tensions with US Treasury and IMF
  he leaves the World Bank
• Mid 2001 he joined faculty of Columbia
  University
• October 2001 Nobel Prize in Economic Science
• 2002 Globalisation and its discontents became a
  best-seller

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Core ideas

• Poverty is an  affront to human dignity 
• G7 governments urge liberalization on developing
  countries while maintaining trade restrictions
  and pushing intellectual property protection into
  the WTO.
• The IMF's policies, in part based on the outworn
  presumption that markets, by themselves, lead to
  efficient outcomes, failed to allow for desirable
  government interventions in the market.
• Asymmetries of information prevent markets from
  full efficiency. Government and market are
  complementary and there is an important role, if
  limited, for government to play.

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What is asymmetry of information?

• It is the difference in information between two
  economic agents within an economic relation
  (e.g.  the worker and his employer, the lender
  and the borrower, the insurance company and the
  insured )
• According to Stiglitz, financial markets cannot
  regulate themselves because anyone do not have
  the same information at the same moment.
  Therefore the aim is to find the best structure
  to regulate markets (and not to let them work by
  themselves).

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Consequences

• Deregulation will not promote financial
  development when information is asymmetric and
  competition inadequate. The economic efficiency
  is not secured. It will spur corruption and
  create an oligarchic elite that opposes the
  emergence of competitive markets.
• The partisans of the  Washington consensus 
  overlooked the importance of economic and
  corporate governance, underestimate the
  difficulty of building institutions, and forgot
  that many countries lack the sophisticated public
  administrations needed to ensure adequate
  competition.

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The challenge of the IMF

• Increased transparency at the IMF is essential.
  Decisions there are made on the basis of ideology
  and bad economics. When crises hit, the IMF
  prescribes outmoded, inappropriate, if standard
  solutions, without considering the effects they
  would have on the people in the countries told to
  follow these policies.
• No discussions of the consequences of alternative
  policies. Ideology guides policy prescription..

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Jeffrey Sachs views
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Jeffrey Sachs

• Director of the Center for International
  Development and professor of international trade
  at Harvard University
• Economic advisor for the government of Poland in
  1990 and for Russia's President Boris Yeltsin
  from 1991 to 1994 he advocated "shock therapy"
  to create market capitalism in Russia
• Special Adviser to the UNs General Secretary

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The situation in Asia

• There vas no   fundamental  reason for Asia s
  financial calamity
• Budgets were in balance or surplus
• Low inflation
• High private savings rates
• Economics were poised for export growth
• The IMFs tough macro-economic conditionality for
  approving financial support led to recessionary
  monetary policy and increased panic

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The Asian crisis an unpredictable crisis

• In Thailand currency overvalued overcapacity
  in real estate
• Bath devaluation required in 1997
• Overstated financial panic of the investors in
  Asian countries domino effect
• Flight of capital in an opposite flow
• Asian countries needed really significant
  financial sector reform
• But not sufficient cause for panic and for harsh
  macroeconomic policy adjustments

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IMF declarations

• Before the Asian crisis (April 1997)
•  Directors welcomed Koreas continued impressive
  macroeconomic performance and praised the
  authorities for their enviable fiscal record 
•  Directors strongly praised Thailands
  remarkable economic performance and the
  authorities consistent record of sound
  macroeconomic policies 
• IMF, 1997 annual report