A warmer, gentler IMF?

07 October 2009

As we move into the next phase of this crisis, when the poor stand to be hit hardest once again, any movement by the IMF towards a more human face is to be welcomed, says says CNN's London correspondent, Richard Quest, in an exclusive column to domain-b

The shoe is now the object of choice to throw at leaders when wishing to object. Former U.S. President George W. Bush received the treatment in Baghdad in 2008. Chinese Premier Wen Jiabao had a loafer lobbed at him at Cambridge University earlier this year.  Iranian President Ahmadinejad has reportedly had footwear flung at him. Besides the symbolism of the shoe, dirty and street trodden, it is also an item authorities can't confiscate before letting ordinary people into the presence of the ''great and good.''  I can't imagine a press conference where I am told: ''Excuse me sir, please leave your shoes at the door and collect them on the way out.''

So it was that last week Dominique Strauss-Khan, the managing director of the International Monetary Fund, saw soles flying during a press conference at the start of the IMF's annual meeting in Turkey.

The IMF has never been a loveable organisation. Unlike UNICEF, rescuing children, or the WWF, saving polar bears, the IMF has always had a whiff of nastiness about it; a large multi-national organization lending money with ''conditions'' to bankrupt countries. Those 'structural adjustment programmes' usually involved telling the down-and-out to cut spending and reduce deficits.  Recessions invariably followed. Social hardship was the price paid.  The IMF has been reviled on just about every continent at some point throughout its half century.

The IMF might have learned its lesson. Strauss-Khan has acknowledged to me that, under his leadership, it is moving away from a ''one size fits all'' economic remedy. Its alphabet soup of lending programmes (FCLs SBAs  DALs etc) in future will take into account local conditions, and be tailored to meet the needs of individual nations. Conditionality has had its day.

The significance of this shift will become vital in the months ahead. The IMF is charged by the Group of 20 (G-20) with co-ordinating the exit strategies from recession to growth. It will be responsible for ensuring some countries don't go off on their own, creating ripples of instability elsewhere.

The problem is that when countries slash spending, there won't be enough money to go around for social needs. Strauss-Khan calls this ''the difficulty of our times.'' He is asking countries to focus on the most vulnerable. The IMF is ''advising governments to secure some part of their resources to help the poorest, the ones hit and harmed by the decrease in public spending.''