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

Photogallery Early Nigeria Results Show Buhari Leading; Tampering Concerns Mount

One local group monitoring polls is concerned politicians might use security agencies to 'fiddle with the election collation process' at state level More

UN: 7,300 Civilians Killed in Boko Haram Insurgency

A senior UN humanitarian official tells the United Nations Security Council 1,000 people have been killed this year More

Turkish President Warns Iran About Trying to Dominate Middle East

Warning comes amid growing concerns inside Turkey that it will be sucked into a sectarian conflict with its neighbor More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Film Tells Story of Musicians in Mali Threatened by Jihadistsi
X
Greg Flakus
March 30, 2015 6:48 PM
At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video Film Tells Story of Musicians in Mali Threatened by Jihadists

At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video With Coalition Airstrikes, Iraq Entering 'Last Page' of IS Battle

American warplanes joined Iraq's battle against the so-called 'Islamic State' in northern Iraq late Wednesday, as Iraqi ground troops launched a massive assault on Tikrit. Analysts say the offensive could take the coalition a step further towards Mosul, the largest city held by Islamic State forces. Others say it could also deepen already-dangerous sectarian tensions in the region. VOA's Heather Murdock has more from Cairo.
Video

Video Philippines Wants Tourists Spending Money at New Casinos

Tourism is a multi-billion dollar industry in the Philippines. Close to five million foreign visitors traveled there last year, perhaps lured by the country’s tropical beaches. But Jason Strother reports from Manila that the country hopes to entice more travelers to stay indoors and spend money inside new casinos.
Video

Video Civilian Casualties Push Men to Join Rebels in Ukraine

The continued fighting in eastern Ukraine and the shelling of civilian neighborhoods seem to be pushing more men to join the separatist fighters. Many of the new recruits are residents of Ukraine made bitter by new grievances, as well as old. VOA's Patrick Wells reports.
Video

Video Islamic State Prisoners Talk of Curiosity, God, Regret

Islamic State fighter, a prisoner of Kurdish YPG forces, asked his family asking for forgiveness: "I destroyed myself and I destroyed them along with me." The Syrian youth was one of two detainees who spoke to VOA’s Kurdish Service about the path they chose; their names have been changed and identifying details obscured. VOA's Zana Omer reports.
Video

Video Germanwings Findings Raise Issue of Psychological Testing for Pilots

More is being discovered about the co-pilot in the crash of Germanwings Flight 9525 in the French Alps. Investigators say he was hiding a medical condition, raising questions about the mental qualifications of pilots. VOA's Carolyn Presutti reports.
Video

Video Hi-tech Motorbike Helmet's Goal: Improve Road Safety

In cities with heavily congested traffic, people can get around much faster on a motorcycle than in a car. But a rider who is not sure of his route may have to stop to look at the map or consult a GPS. A Russian start-up company is working to make navigation easier for motorcyclists. Designers at Moscow-based LiveMap are developing a smart helmet with a built-in navigation system, head-mounted display and voice recognition. Zlatica Hoke has more.
Video

Video DOJ: Illinois National Guard Soldier Tried to Join ISIS

U.S. federal law enforcement agents arrested two suburban Chicago men accused of trying to join ISIS overseas, while also plotting attacks in the United States. As VOA’s Kane Farabaugh reports from the Midwest state of Illinois, one of those arrested is a soldier of the Illinois National Guard.
Video

Video New Wheelchair Is Easier to Use, Increases Mobility

Traditional push-rim wheelchairs create a lot of stress for arm, shoulder and neck muscles and joints. A redesigned chair, based on readily available bicycle technology, radically increases mobility while reducing the physical effort. VOA’s George Putic reports.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.

VOA Blogs

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.9220
JPY
USD
119.88
GBP
USD
0.6757
CAD
USD
1.2640
INR
USD
62.626

Rates may not be current.