Seminar Highlights IMF Role in Asia's Development

• Author: Robert W. Russell
• Position: IMF External Relations Department
• Pages: 337-347

Page 337

Fresh perspectives on Asia's economic record and the IMF's role were presented at a public seminar in Hong Kong, China, sponsored by the IMF. Leading academic economists from throughout Asia joined senior IMF and national officials for the one-day event.

Chen Yuan, Deputy Governor of the People's Bank of China, opened the seminar on September 19 by assuring participants that continued modernization of the Chinese economy-including reform of the state-owned sector-would sustain China's strong economic growth, which he projected at an annual rate of 8-9 percent for the next few years, with inflation remaining below 6 percent. Chen concluded that China's solid performance, plus its close trade and investment links with Asian partners, could make a significant contribution to regional prosperity.

Michael Mussa, IMF Economic Counsellor and Director of the Research Department, led off a discussion of IMF policy in Asia by likening the IMF to a "macroeconomics doctor." IMF surveillance proffers sound analysis and advice to assist member countries in maintaining good macroeconomic health and financial stability and avoiding thePage 345 accidents or bad habits that may contribute to poor health. IMF financial support to members experiencing macroeconomic difficulty complements their adjustment programs aimed at restoring good macroeconomic health. Typically, however, the period of recuperation can be uncomfortable.

Mussa pointed out two limitations. First, although the international community agrees on the broad policies that promote rapid and steady economic growth- low inflation, financial stability, and social progress-the economics profession, like the medical profession, has no magic formula for achieving the desired goals. Both must continuously strive to extend, revise, and apply the body of relevant professional knowledge. Second, the IMF "does not, cannot, and should not determine or dictate the economic policies of its members." Even for countries negotiating the terms of an adjustment program meriting IMF financial support, economic policies depend largely on the authorities' judgment of what is desirable and feasible and on the willingness and capacity of the political system to pursue appropriate policies.

Montek Singh Ahluwalia, India's Finance Secretary, emphasized the increasing complexity of the IMF's work. The IMF now considers a multiplicity of national policy objectives that compel it to go beyond its traditional...