Ricardo Hausmann director of Harvard’s Center for International Development, former planning minister of Venezuela and chief economist of the IDB
“I think that the IMF is a countercyclical institution so the fact it’s not being used right now is to be expected, and we want it to be there when the cycle turns around as, if history is any indication, it will. The IMF is a crisis management institution. Before we change too many things we should guarantee that it’s there to play a role in the future.
“I think on balance the IMF’s role in Latin American crises has been positive. The people who say otherwise have the burden of proof on their side: arguments about moral hazard and market uncertainty have to be based on some counterfactual. I want to see the IMF involved not only in crisis avoidance but also in crisis management in the future.”
Daniel Marx former Argentine finance secretary under threee administrations
Governance reform is inevitable with a redistribution of power within the Board and other modifications of decision-making processes, Marx says. The Fund will reinforce its focus on international financial stability, he believes: “For Latin America that will make a difference although only at the margins in the near future,” he says.
Walter Molano head of research at BCP Securities
“I really think the IMF is an obsolete and morally bankrupt institution. People had a very bad taste in their mouths after what the IMF did in Latin America in the 1990s; it was very arbitrary in its application of policies. The biggest case in point was Argentina.
“The IMF as an institution is still the cartel of the G7, and the G7 uses it as a policy tool. As long as it remains like that, Latin American countries are going to do all they can to avoid it. For the most part the investors don’t want the IMF involved either. What’s the point? The reduced role of the IMF has made it a much clearer and plainer playing field than it was before.”
Ian Vasquez director of the Cato Institute’s Project on Global Economic Liberty
“I think the IMF should renounce big bailouts. In practice it’s moved away from those because by now everybody even inside the IMF agrees that it’s not a good policy, but it hasn’t renounced the policy. It should be explicit about renouncing that. I’m not a big fan of the IMF; I’m a critic of it and have long called for it to be shut down.
“I think the new situation in Latin America leaves it in very uncertain territory because it still exists, and mostly I think it generates uncertainty in financial markets.
“I don’t know that it will be very useful even in offering advice.”
Jerome Booth head of research at Ashmore Investment Management
“In the future I think it’s very difficult to see as strong a role for the IMF in Latin America. Latin America is in a situation where it may not require huge bailing out packages any more, and the IMF will be more and more focused towards Africa rather than Latin America. The IMF should also possibly focus more on imbalances in the developed world more in line with its original mission.
“In terms of creating a forum for discussion, I don’t think the IMF is the best place for that. The IDB is in a better position. However, the Fund can help some of the smaller Latin American countries in the future in the traditional way, in terms of being able to provide balance of payments support in cases where there is a liquidity problem but not a solvency issue. I don’t see a strong regional demand for the IMF’s services though. That’s a good thing. Britain doesn’t go to the IMF as often as it used to, and I don’t think Latin America should either.”
Richard Portes professor of economics at the London Business School
and founder of the Centre for Economic Policy Research
“What should the Fund be doing in Latin America? It shouldn’t be getting involved explicitly in debt default and restructuring. If a country is in a crisis, it should be able to ask for Fund support, and there should be a preventative mechanism for lending to a country when the spreads being demanded by the market go beyond sustainable levels.
“Brazil and Mexico probably don’t need Fund advice; maybe Peru and Ecuador do. And the Fund has some expertise that the IDB, for example, does not: on exchange rate policy and fiscal policy and maybe in financial sector restructuring, liberalization, reform, etc. Those are the IMF’s core competences. But its proper role is best seen as the guardian of the international financial system, with all that implies for multilateral surveillance.”