"New Architecture" Outlined: Camdessus Says IMF Support for Asian Programs Is Marked Departure from Traditional Role

• Pages: 49-50

Page 49

Speaking before the Council on Foreign Relations on February 6, IMF Managing Director Michel Camdessus outlined the new directions that the IMF's activities in Asia have taken and spelled out the implications of the Asian crisis for the future architecture of the international financial system (see page 50 for excerpts of the speech).

The IMF-supported programs in Thailand, Indonesia, and Korea represent a "marked departure" from those the institution has traditionally supported, Camdessus said. Instead of austerity measures to restore macroeconomic balance, the centerpiece of each program is a set of forceful, far-reaching structural reforms aimed at restoring market confidence. The reforms included in these programs will require vast changes in domestic business practices, corporate culture, and government behavior.

Answering critics who have argued that the programs are too tough because they could slow economic activity, Camdessus said that without the programs and the international support behind them, the slowdown would be much more dramatic, the costs to the general population much higher, and the risks to the international economy much greater. Camdessus also answered critics who claim that providing assistance to countries in crisis will only encourage more reckless behavior by borrowers and (Please turn to the following page)Page 50 lenders in the future. The global interest, he said, lies in containing and overcoming the Asian crisis as quickly as possible, even at the cost of some unde-sired side effects. Working through the IMF offers the most expeditious and cost-effective way to accomplish this. In light of the Asian crisis, attention is now turning toward how to strengthen the international financial system so that such crises...