The most complete set of articles concerning the IMF controversy is found at Nouriel
Roubini's web site.
The Financial Times has a helpful special report from late '98 on the IMF.
The IMF position rests on the position that emerging country debt levels are manageable through the increased in efficiency which is the purpose of the IMF program of economic reform. The concern with increased efficiency and economic reform in the middle of the Asian crisis led to Alan Blinder's widely quoted metaphor that dispatching all available fire engines might be given higher priority than rebuilding the firehouse.
An understudied but very thoughtful critique of the IMF is a March 1998 article by Robert Wade and Frank Veneroso. Wade and Veneroso stress that the demand by the IMF that countries under the IMF programs maintain high real interest rates is causing unwarranted economic stress against the "mountain of debt" in the Asian countries. Wade and Venerosa maintain that the high (by western standards) levels of debt-to-equity has been necessary, in their view, for "firms that aim to make an assault on major world industries." The large role of bank debt has also been necessary, in their opinion, to absorb the high savings rates in East Asian countries. The banking systems and highly leveraged firms then, in their view, need to be protected from the varagies of the world capital market by capital controls. Their argument that debt rather than equity financing is more of an assertion than a well documented argument and they, like other authors call for controls when the underlying problem is the smallness of the currency areas relative to the size of the world capital market.
Despite the shortcomings cited above, the Wade-Veneroso study supports my thesis that IMF programs in emerging economies are contributing to global deflation.
The critique of the IMF is politically potent since it comes from both the
right and the left.
The two sides are found, for example, in the U.S. House
of Representatives:
An attack from the left was mounted by