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Only in 2003, the unwinding of these imbalances is projected by the IMF to shave 3 percentage points off America's growth rate. But are the twin budget and current account deficits the inevitable outcomes of American fiscal dissipation and imports run amok or a simple reflection of America's unrivalled attractiveness to investors, traders, and businessmen the world over?
We, together with African leaders, urged the release of political prisoners, and many have been released; we provided emergency economic assistance to help avoid economic collapse, and helped to involve the IMF and the banking community to bring about economic stability; and we have worked closely with the new leaders to maintain Liberia's strong ties with the West and to protect America's vital interests.
The third lesson is that international financial institutions can be of some help when not driven by political or geopolitical considerations and when not married to a dogma. Unfortunately, these are the rare cases. Most IFIs notably the IMF and, to a lesser extent, the World Bank are both politicized and doctrinaire.
Technology helps reduce mortality rates, disease, and hunger among the destitute. This may well foretell the shape of things to come. Governments and Growth By: Dr. Sam Vaknin Also Read: The Washington Consensus I. The IMF It is a maxim of current economic orthodoxy that governments compete with the private sector on a limited pool of savings.
With governments, central banks, or the IMF as lenders and insurer of last resort there is little counterparty risk. Private counterparties are a whole different ballgame. They are loth and slow to pay. Dismayed creditors have learned this lesson in Russia in 1998. Investors in derivatives get acquainted with it in the 2001-2 Enron affair. Mr.
All others regard capitalism as yet another rigid and unforgiving creed, this time imposed from Washington by the IMF and multinationals rather as communism was enjoined from Moscow by the Kremlin. With eight of the former communist countries about to become members of the European Union albeit second rate ones transition is entering is most fascinating phase.
Governments are willing to act imprudently, safe in the knowledge that the IMF is a lender of last resort, which is often steered by geopolitical considerations, rather than merely economic ones. Creditors are more willing to lend and at lower rates, reassured by the IMF's default-staving safety net.
The IMF couches the awareness of a growing global addiction in its usual cautious terms: "The possibility of an abrupt and disruptive adjustment in the U.S. dollar remains a concern, for both the United States and the rest of the world ... The question is not whether the U.S. deficit will be sustained at present levels forever it will not but more when and how the eventual adjustment takes place ... While this would likely be manageable in the short term it could adversely affect the sustainability of recovery later on."
Days after the common statement, the IMF considered by some to be a long arm of America's foreign policy clinched a standby arrangement with Macedonia, the first in two turbulent years. On the same day, Bulgaria received glowing and counterfactual reviews from yet another IMF mission, clearing the way for the release of a tranche of $36 million out of a loan of $330 million.
Inflation acts as a tax and is fiscally corrective but without the recessionary and deflationary effects of a "real" tax. The outcomes of inflation, ironically, resemble the economic recipe of the "Washington consensus" propagated by the likes of the rabidly anti-inflationary IMF. As a long term policy, inflation is unsustainable and would lead to cataclysmic effects.
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