IMF is the big winner of G-20 summit
TEXT OF STORY
Kai Ryssdal: There were few surprises at the G-20 meeting over in London today. The communique from the leaders of the world’s 20 largest economies was pretty much what we all saw coming: Tougher financial regulation. A crackdown on tax havens. Tighter controls over hedge funds and more along those lines. But there was one thing that stood out. A huge increase in the International Monetary Fund’s bank account. The IMF will have three quarters of a trillion dollars to play with and what looks to be a new lease on life. From the European Desk in London, Marketplace’s Stephen Beard reports.
STEPHEN BEARD: The IMF is the big winner in the summit. It’s been given a new role: savior of the global economy. The body will get $750 billion worth of public cash, that includes $250 billion worth of its own special money that it can print itself. It will then offer short-term loans to countries that get into trouble.
Most observers were astonished at this upswing in the IMF’s fortunes. But not Simon Johnson, the body’s former chief economist.
SIMON JOHNSON: In order to fight a global crisis you’ve got to work with what you’ve got. You’ve got the IMF. The IMF was short on cash before. And now it’s got plenty of money to lend out.
But the IMF has to live down a legacy of distrust and fear. Economist Andrew Hilton says the body is still regarded as little better than a loan shark in the developing world. It’s widely hated there for some of its previous lending practices.
ANDREW HILTON: It would apply exactly the same solution to every single problem: cut government spending, fire people, lay off workers, make life grim for everyone who lives in the country and then we’ll give you a bit of money.
IMF supporters say the organization is now more sensitive and constructive in its approach. Sarah Edwards of the Jubilee Debt Campaign is not convinced.
SARAH EDWARDS: And we’re worried that new money will in fact potentially have some of the same damaging effects as the lending that the IMF has carried out in the past.
But such is the scale of the current crisis that most of the IMF’s new customers are likely to be middle-income countries in the developed world. An East European country like Poland could be an early client. Mexico has already applied for a loan. The new, beefed-up IMF is going to be a busy, and say its supporters, responsible lender.
In London, this is Stephen Beard for Marketplace.
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