News / Economy

IMF Says Its 'Negative Image' Steers Countries Away from Borrowing

Reuters
Many countries are hesitant to rely on the IMF's new lending instruments because of a perceived “stigma” attached to taking money from the global financial institution, the International Monetary Fund said on Wednesday.

The IMF has launched a series of new lending programs in recent years that it hoped would appeal to countries with generally good economic policies, but that still needed some protection from market contagion. The Fund's traditional lending programs are meant for countries with an urgent crisis, and come with stringent conditions attached.

But only a few countries have been interested, surprising IMF staff who had thought the program would be popular during the period of market stress after the global financial crisis, and during the recent rout in emerging markets tied to the Federal Reserve's slowing pace of asset purchases.

In many cases, countries needing insurance against outside shocks have accumulated reserves, expanded bilateral swap lines, or launched regional financing arrangements instead of turning to the IMF.

“To a large degree, this reflects the degree of political stigma related to Fund engagement that prevents some members from seeking pre-emptive Fund financial support,” IMF staff members said in a policy paper.

“Policymakers' reluctance to come to the Fund appears to stem largely from the persistently negative image that the Fund has among many civil society opinion leaders, NGOs, and the general public, particularly in countries affected by past crises,” the paper added.

For example, the IMF's reputation in Asia remains tarnished by the policy advice it dispensed during the Asian financial crisis in the late 1990s. At the time, it recommended deep budget cuts and tight monetary policy, which critics say exacerbated the economic downturn.

Countries in the region have amassed some $6 trillion in foreign exchange reserves in part to ensure they will never again have to seek an IMF bailout.

The IMF said it would strive to reach out to a broader group, beyond just governments, in order to improve its reputation.

“When countries do have to seek fund support it's better that they do it promptly and don't feel inhibited from doing so by ... perceptions that Fund support is going to be damaging to their economy,” a senior IMF official told reporters, speaking on condition of anonymity.

The paper focused on three instruments the IMF launched since the global financial crisis. At the height of the crisis in 2009, the IMF rolled out the Flexible Credit Line for well-run emerging market economies constrained by the global credit squeeze. But only Mexico, Poland and Colombia signed up.

Two years later, it launched a six-month liquidity line aimed at countries with solid policies that might have been at risk from market jitters, such as the debt crisis in the eurozone. So far, only Morocco has asked for that instrument, called the Precautionary and Liquidity Line.

Another new program, called the Rapid Financing Instrument, also remains untested. This type of support, which is now seen as one of the options for helping Ukraine, is meant for nations with urgent balance of payment needs caused by outside shocks.

The IMF paper said the Fund would work on clarifying what countries must do to qualify for these types of programs, which could encourage more of them to sign up.

You May Like

Americans Celebrate Thanksgiving With Feasts, Festivities

Feasts centering on turkeys with an array of traditional sides and desserts are part of the holiday's traditions, which falls on the fourth Thursday in November More

Video For Obama, Ferguson Violence is a Personal Issue

With two years left in term, analysts say, president has less to lose by taking conversation on race further More

Video Italian Espresso Expands Into Space

When Italian astronaut Samantha Cristoforetti headed for the ISS, her countrymen worried how she would survive six months drinking only instant coffee More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Community Kicks Off Thanksgiving With Paradei
X
Anush Avetisyan
November 26, 2014 10:57 PM
Thursday is Thanksgiving in the United States, a holiday whose roots go back to the country's earliest days as a British colony. One way Americans celebrate the occasion is with parades. Anush Avetisyan takes us to one such event on the day before Thanksgiving near Washington, where a community's diversity is on display. Joy Wagner narrates
Video

Video US Community Kicks Off Thanksgiving With Parade

Thursday is Thanksgiving in the United States, a holiday whose roots go back to the country's earliest days as a British colony. One way Americans celebrate the occasion is with parades. Anush Avetisyan takes us to one such event on the day before Thanksgiving near Washington, where a community's diversity is on display. Joy Wagner narrates
Video

Video For Obama, Ferguson Violence is a Personal Issue

Throughout the crisis in Ferguson, Missouri, President Barack Obama has urged calm, restraint and respect for the rule of law. But the events in Ferguson have prompted him to call — more openly than he has before — for profound changes to end the racism and distrust that he believes still exists between whites and blacks in the United States. VOA White House correspondent Luis Ramirez reports.
Video

Video Online Magazine Gets Kids Discussing Big Questions

Teen culture in America is often criticized for being superficial. But an online magazine has been encouraging some teenagers to explore deeper issues, and rewarding their efforts. VOA religion reporter Jerome Socolovsky went to this year’s Kidspirit awards ceremony in New York.
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8016
JPY
USD
117.76
GBP
USD
0.6340
CAD
USD
1.1268
INR
USD
61.850

Rates may not be current.