Sugisaki reviews issues and reforms that have absorbed the IMF over past 15 years

• Pages: 215-216

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On June 14, IMF Deputy Managing Director Shigemitsu Sugisaki spoke at the Oesterreichische Nationalbank Twenty-Eighth Economics Conference in Vienna, Austria, on some of the issues that have occupied the IMF during the past 15 years. Below are edited excerpts of his remarks. The full text is available on the IMF’s website (www.imf.org).

Managing transition

As has been clear from the experience of the past decade, the process of transforming centrally planned socialist economies is very complex, with far-reaching changes in the political, economic, and social relations within these countries. In every case, key reform measures have included macroeconomic stabilization; price and market liberalization, including that of the exchange and trade systems; restructuring and privatization; and redefinition of the role of the state so that it provides and enforces a level playing field and corrects market imperfections.

The IMF—along with the World Bank and other national and international agencies—has been heavily involved in assisting with the transformation of centrally planned economies. All of our efforts have centered around achieving and consolidating macroeconomic stabilization and accelerating structural reform. IMF efforts, along with those of the World Bank, have in many respects broken new ground in advising on why structural reforms were essential and how they could be carried out. Our technical assistance program has played a key role in helping the authorities adapt their monetary, exchange rate, fiscal, and statistical systems to the requirements of a market economy. The training of officials and the provision of technical assistance have also made important contributions to institution building.

The key lesson we have learned is that financial stabilization is necessary for growth, but comprehensive progress on all fronts of a broad structural reform agenda is indispensable for sustained growth. The most successful transition economies are those that have undertaken more and faster reform.

There are also areas where we have faced considerable challenges. For example, while privatization is a key element in the reform process, both the absence of hard budget constraints and the existence of insider privatization have posed obstacles to self-induced restructuring. Similarly, poor governance—ranging from...