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March 10, 2000

WASHINGTON, Mar 9: A US congressional commission proposed drastic curbs in the operations of the World Bank and International Monetary Fund yesterday, winning plaudits and brickbats for their radical ideas, reports Reuters.

At an acrimonious meeting presenting the report to the press and public, commission chairman Allan Meltzer said the proposals outlined In the 124-page document would prevent the IMF from "micromanaging" the economies of member states.

But economist Fred Bergsten, one of three analysts who put out a dissenting opinion on the controversial report, said the suggestions would undermine the world economy and hurt US economic interests.

"The majority proposals would sharply Increase the risk of International economic disorder and dash the prospects of economic development for millions of poor people," he said.

The report, whose authors Included long-term critics of the IMF, Is part of a review Initiated in 1998 when Congress approved the US share of higher quotas at the IMF.

Congressional leaders might try to include some Ideas in legislation. But change at the two Institutions will depend on the response from other member states as well.

The United States has 18 per cent of the votes at the IMF and the World Bank, enough to make other countries listen, but not enough to force sweeping policy change. The proposals from the commission would only allow the IMF to provide short-term credits, lending to fewer countries than at present. And they would stop the World Bank from lending to countries that can raise cash on private markets.

Congress plans hearings on the report on March 23, with testimony from Treasury Secretary Lawrence Summers and from commission members.

But House Democratic leader Richard Gephardt said the report took "a slash and burn" approach to the International financial institutions it was mandated to investigate.

"The authors of the majority report claim to advocate reform for the purpose of strengthening the IMF and the World Bank," he said. "In reality they aim to weaken the resources and undermine credibility of these institutions."

Many In Congress have long been critical of the IMF, arguing that its policies make financial crises worse, or that they neglect workers' rights.

The World Bank, which would lose most of its existing functions if the proposals were ever implemented, has also come in for Congressional criticism.

World Bank media chief Caroline Anstey said the commission's "faulty recommendations" were based on flawed data. "While we welcome review of the bank's work by both our supporters and our critics, we find the results of this particular review very disappointing," she said.

The bipartisan commission agreed unanimously on two points in the report — a call to multilateral lenders to forgive the debts owed to them by some of the world's poorest countries, and to limit IMF lending to "short-term liquidity loans."

Development groups welcomed the idea of debt relief, but said the report failed to address fundamental problems at the bank and the fund, which both played major roles In efforts to resolve the world financial crisis of 1997-99.

"A committee dominated by neo-liberal Republicans is calling for outright debt cancellation ... yet the IMF and World Bank will not put this overwhelming consensus into action," said Anne Pettifer of debt relief lobbyist Jubilee 2000.

Source: The Daily Star


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