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IMF and the World Bank - Part 1
1.0 Introduction
The International Monetary Fund (IMF) and World Bank (WB) are sister organisations, set up after the World War II to promote economic stability and development throughout the world.
The Great Depression of the 1930s resulted in destruction of the prevailing world economic system. There was widespread unemployment which nations started exporting to each other. This also led to a currency war which destabilised the world trade.
The exact starting date of the 1930s currency war is open to debate. The main perpetrators of this crisis were Great Britain, United States and France.
Due to the depression and the stock market crisis of 1929, the collaboration that existed between Britain, France and the US due to coinciding interests turned into economic confrontation and competition. After the stock market crisis, there was a selling pressure on the sterling and US and France took their currencies off the gold standard. Great Britain too, then took its currency off the gold standard and devalued its currency which started a series of competitive devaluations. These fluctuations were very harmful for international traders and global trade declined sharply. For several years after this, global trade was disrupted by competitive devaluation and by retaliatory tariffs. The currency war of the 1930s is generally considered to have ended with the Tripartite Monetary Agreement of 1936.
A need was felt for cooperation amongst various nations to prevent recurrence of any currency war.
2.0 International co-operation before the IMF and the World Bank
The Lend-Lease program established in 1941 and the United Nations Relief and Rehabilitation Administration (UNRRA) established in 1943 were primary precursors of today's development assistance architecture. Lend-Lease initially provided for the transfer of food, machinery, war supplies, and services to China and the countries of the British Commonwealth, although it was expanded almost immediately to the Soviet Union and the “Free French”. The Lend-Lease Act authorized the American President to sell, transfer, lend, or lease such goods and services and to establish the terms for such transfers. Repayment could be-in kind or property, or any other direct or indirect benefit which the President deems satisfactory.
By the time of its official termination in August 1945, total Lend-Lease commitments exceeded $ 606.60 billion in constant 2010 dollars.
When the UNRRA was established in 1943, the United Nations as we know it today did not exist. Although President Franklin Roosevelt (US) had used the term "United Nations" in 1941 to describe countries fighting against the “Axis”, the first official use of the term was on January 1, 1942, when twenty-six states signed the Declaration by the United Nations committing them not to enter into any separate peace with the Axis Powers.
By the time the functions of the UNRRA were transferred to other newer United Nation's specialized agencies in Europe (1947) and Asia (1949), fifty-two countries had participated in UNRRA's programs. Of the total amount disbursed, approximately sixty-two percent went to the United Kingdom followed by the Soviet Union with about twenty-two percent. China, Czechoslovakia, Greece, Italy, Poland, the Ukrainian SSR, and Yugoslavia were the other primary recipients.
The most interesting aspect of the UNRRA experience was that it served as an organizational and financial model for future multi-lateral assistance agencies. More than half of UNRRA's budget was financed by the United States, but the remainder was provided by other member-countries through financial subscriptions equivalent to two percent of their 1943 gross national incomes (GNI). With respect to the World Bank, financing through member-country subscriptions has been the primary way most international organizations have been financed since the end of World War II.
3.0 Post World War II
The Bretton Woods Conference took place in July 1944, but some of its core accords did not become operative until December 1958, when all European currencies became convertible. The IMF was developed as a permanent international body. The summary of agreements states, "The nations should consult and agree on international monetary changes which affect each other. They should outlaw practices which are agreed to be harmful to world prosperity, and they should assist each other to overcome short-term exchange difficulties." The IBRD was created to speed up post-war reconstruction, to aid political stability, and to foster peace. This was to be fulfilled through the establishment of programs for reconstruction and development.
The main terms of this agreement were:
- Formation of the IMF and the IBRD, which is today part of the World Bank.
- Adjustably pegged foreign exchange market rate system: The exchange rates were fixed, with the provision of changing them if necessary.
- Currencies were required to be convertible for trade related and other current account transactions. The governments, however, had the power to regulate ostentatious capital flows.
- As it was possible that exchange rates thus established might not be favourable to a country's balance of payments position, the governments had the power to revise them by up to 10%.
- All member countries were required to subscribe to the IMF's capital.
John Maynard Keynes and Harry Dexter White were the intellectual founding fathers of the IMF and the World Bank. White was the chief international economist at the U.S. Treasury. In 1944, he drafted the American plan for the IMF that competed with the British Treasury blueprint drafted by Keynes.
Most of White's plan was incorporated into the final acts adopted at Bretton Woods. The IMF was given the role of promoting global economic growth through international trade and financial stability.
One of Keynes' most significant roles was as chairman of the Bank Commission. Under his leadership, the Bank articles were drafted rapidly and successfully despite the lack of pre-conference groundwork regarding the organization of the World Bank.
The Articles of Agreement of the IMF put forth the following as the objectives of the IMF:
- promote international monetary cooperation
- expansion and balanced growth of international trade
- promote exchange rate stability
- help establish multilateral system of payments and eliminate foreign exchange restrictions
- make resources of the Fund available to members
- Shorten the duration and lessen the degree of disequilibrium in international balances of payments
The IMF was formally created in 1945 by 29 member countries. The IMF's stated goal was to assist in the reconstruction of the world's international payment system post–World War II. Countries contribute money to a pool through a quota system from which countries with payment imbalances can borrow funds temporarily. Through this activity and others such as surveillance of its members' economies and the demand for self-correcting policies, the IMF works to improve the economies of its member countries. By 2016, the IMF has 188 member countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
4.1 Important Terminologies of the IMF
4.1.1 Special Drawing Rights (SDRs)
The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies.
The SDR was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves, government or central bank holdings of gold and widely accepted foreign currencies that could be used to purchase the domestic currency in foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets - gold and the U.S. dollar - proved inadequate for supporting the expansion of world trade and financial development that was taking place. Therefore, the international community decided to create a new international reserve asset under the auspices of the IMF.
However, only a few years later, the Bretton Woods system collapsed and the major currencies shifted to a floating exchange rate regime. In addition, the growth in international capital markets facilitated borrowing by creditworthy governments. Both of these developments lessened the need for SDRs
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4.1.2 Quota subscriptions
The IMF's quota system was created to raise funds for loans. Each IMF member country is assigned a quota, or contribution, that reflects the country's relative size in the global economy. Each member's quota also determines its relative voting power. Thus, financial contributions from member governments are linked to voting power in the organisation.
This system follows the logic of a shareholder-controlled organisation: wealthy countries have more say in the making and revision of rules. Since decision making at the IMF reflects each member's relative economic position in the world, wealthier countries that provide more money to the fund have more influence in the IMF than poorer members that contribute less; nonetheless, the IMF focuses on redistribution. Quotas are normally reviewed every five years and can be increased when deemed necessary by the Board of Governors.
4.1.3 General Agreements to Borrow (GAB)
GAB is a borrowing/lending medium for members of the Group of Ten. Members of the lending country deposit funds into the International Monetary Fund (IMF), which are made available to be withdrawn by the borrowing member in need. One of the advantages of this is that each country deals in their own currency, leaving all conversions to the IMF. The Group of Ten is made of Japan, France, Germany, Sweden, The United Kingdom, Japan, Italy, Belgium, the Netherlands, the United States and Canada. Switzerland is the most recent member. They meet yearly to discuss political, financial and economic situations.
4.2 Organisation of the IMF
The Board of Governors (BOG) is the highest authority in the IMF. All countries are represented on the BOG (usually at the Finance Minister level or equivalent). The BOG usually meets annually in the fall. A committee of the BOG, the International Monetary and Financial Committee (IMFC), meets twice annually to consider major policy issues affecting the international monetary system and make recommendations to the BOG. The Development Committee, a joint committee of the Boards of Governors of the IMF and World Bank, also meets at the same time to consider development policy issues and other matters affecting developing countries. The two committees generally issue communiques at the close of their meetings, summarizing their findings and recommendations. These often serve as policy guidance to the IMF and Bank, pending final action by the BOG, and as a means for airing views and for coordinating or harmonizing country policies on issues of international concern.
Day-to-day authority over operational policy, lending, and other matters is vested in the Board of Executive Directors (BED), a 24 member body that meets three or more times a week to oversee and supervise the activities of the IMF. The five largest shareholders are the United States, Japan, Germany, Britain and France; all appoint their own representatives on the Board. The remaining members are elected (for two year terms) by groups of countries, generally on the basis of geographical or historical affinity. A few countries - Saudi Arabia, China and Russia - have enough votes to elect their own executive directors (EDs). Most countries are represented on the BED, however, by EDs who also represent five to twenty other countries. The EDs each have voting authority equal in size to the combined vote of the member countries that appointed or elected them. They must cast their votes as a unit. The executive board has several committees which examine policy and budget issues and other important matters. The IMF executive board selects the Managing Director of the IMF, who serves as its chairman and as chief executive officer of the IMF.
The Managing Director manages the ongoing operations of the Fund (under the policy direction of the executive board), supervises some 2,800 staff members, and oversees the preparation of policy papers, loan proposals, and other documents which go before the executive board for its approval. Most of the material which comes to the executive board is prepared by IMF management or staff. However, some documents and recommendations are prepared by executive directors themselves or by the governments they represent. The Managing Director is elected for a five-year renewable term of office. The executive board also approves the selection of the Managing Director's principal assistants, the First Deputy Managing Director and two other Deputy Managing Directors. By tradition, the European countries have the right to nominate persons who might be elected as IMF Managing Director (The U.S. has a similar prerogative at the World Bank.) The First Deputy Managing Director of the IMF is typically a U.S. citizen). Recent controversies have prompted the board to consider possible ways the Managing Director might be selected on the basis of merit, rather than by geography or political connections.
4.3 Borrowings from the IMF
A core responsibility of the IMF is to provide loans to member countries experiencing actual or potential balance of payments problems. This financial assistance enables countries to rebuild their international reserves, stabilize their currencies, continue paying for imports, and restore conditions for strong economic growth, while undertaking policies to correct underlying problems. Unlike development banks, the IMF does not lend for specific projects.
4.4 When can a country borrow from the IMF?
A member country may request IMF financial assistance if it has a balance of payments need (actual or potential) - that is, if it cannot find sufficient financing on affordable terms to meet its net international payments (e.g., imports, external debt redemptions) while maintaining adequate reserve buffers going forward. An IMF loan provides a cushion that eases the adjustment policies and reforms that a country must make to correct its balance of payments problem and restore conditions for strong economic growth.
4.5 The changing nature of IMF lending
The volume of loans provided by the IMF has fluctuated significantly over time. The oil shock of the 1970s and the debt crisis of the 1980s were both followed by sharp increases in IMF lending. In the 1990s, the transition process in Central and Eastern Europe and the crises in emerging market economies led to further surges of demand for IMF resources. Deep crises in Latin America and Turkey kept demand for IMF resources high in the early 2000s. IMF lending rose again in late 2008 in the wake of the global financial crisis.
4.6 The process of IMF lending
Upon request by a member country, IMF resources are usually made available under a lending “arrangement”, which may, depending on the lending instrument used, stipulate specific economic policies and measures a country has agreed to implement to resolve its balance of payments problem. The economic policy program underlying an arrangement is formulated by the country in consultation with the IMF and is in most cases presented to the Fund's Executive Board in a “Letter of Intent”. Once an arrangement is approved by the Board, IMF resources are usually released in phased installments as the program is implemented. Some arrangements provide strong-performing countries with a one-time up-front access to IMF resources and thus not subject to the observance of policy understandings.
4.7 IMF lending instruments
Over the years, the IMF has developed various loan instruments that are tailored to address the specific circumstances of its diverse membership. Low-income countries may borrow on concessional terms through the Extended Credit Facility (ECF), the Standby Credit Facility (SCF) and the Rapid Credit Facility (RCF). Concessional loans carry zero interest rates.
Nonconcessional loans are provided mainly through Stand-By Arrangements (SBA), the Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL), and the Extended Fund Facility (which is useful primarily for medium- and longer-term needs). The IMF also provides emergency assistance via the Rapid Financing Instrument (RFI) to all its members facing urgent balance of payments needs. All non-concessional facilities are subject to the IMF's market-related interest rate, known as the “rate of charge”, and large loans (above certain limits) carry a surcharge. The rate of charge is based on the SDR interest rate, which is revised weekly to take account of changes in short-term interest rates in major international money markets. The maximum amount that a country can borrow from the IMF, known as its access limit, varies depending on the type of loan, but is typically a multiple of the country's IMF quota. This limit may be exceeded in exceptional circumstances. The Stand-By Arrangement, the Flexible Credit Line and the Extended Fund Facility have no pre-set cap on access.
The new concessional facilities for LICs became effective in January 2010 under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund's financial support more flexible and better tailored to the diverse needs of LICs. Access limits and norms have been approximately doubled compared to pre-crisis levels. Financing terms have been made more concessional, and the interest rate is reviewed every two years. All facilities support country-owned programs aimed at achieving a sustainable macroeconomic position consistent with strong and durable poverty reduction and growth.
The Extended Credit Facility (ECF) succeeds the Poverty Reduction and Growth Facility (PRGF) as the Fund's main tool for providing medium-term support to LICs with protracted balance of payments problems. Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years.
The Standby Credit Facility (SCF) provides financial assistance to LICs with short-term balance of payments needs. The SCF replaces the High-Access Component of the Exogenous Shocks Facility (ESF), and can be used in a wide range of circumstances, including on a precautionary basis. Financing under the SCF currently carries a zero interest rate, with a grace period of 4 years, and a final maturity of 8 years.
The Rapid Credit Facility (RCF) provides rapid financial assistance with limited conditionality to LICs facing an urgent balance of payments need.The RCF streamlines the Fund's emergency assistance for LICs, and can be used flexibly in a wide range of circumstances. Financing under the RCF currently carries a zero interest rate, has a grace period of 5½ years, and a final maturity of 10 years.
Stand-By Arrangements (SBA). Historically, the bulk of non-concessional IMF assistance has been provided through SBAs. The SBA is designed to help countries address short-term balance of payments problems. Programme targets are designed to address these problems and disbursements are made conditional on achieving these targets ('conditionality'). The length of a SBA is typically 12-24 months, and repayment is due within 3¼-5 years of disbursement. SBAs may be provided on a precautionary basis-where countries choose not to draw upon approved amounts but retain the option to do so if conditions deteriorate-both within the normal access limits and in cases of exceptional access. The SBA provides for flexibility with respect to phasing, with front-loaded access where appropriate.
Flexible Credit Line (FCL). The FCL is for countries with very strong fundamentals, policies, and track records of policy implementation and is useful for both crisis prevention and crisis resolution. FCL arrangements are approved, at the member country's request, for countries meeting pre-set qualification criteria. The length of the FCL is one or two years (with an interim review of continued qualification after one year) and the repayment period is the same as for the SBA. Access is determined on a case-by-case basis, is not subject to the normal access limits, and is available in a single up-front disbursement rather than phased. Disbursements under the FCL are not conditional on implementation of specific policy understandings as is the case under the SBA because FCL-eligible countries have a demonstrated track record of implementing appropriate macroeconomic policies. There is flexibility to either draw on the credit line at the time it is approved or treat it as precautionary. In case a member country draws, the repayment term is the same as that under the SBA.
Precautionary and Liquidity Line (PLL). The PLL replaced the Precautionary Credit Line (PCL), building on its strengths and enhancing its flexibility. The PLL can be used for both crisis prevention and crisis resolution purposes by countries with sound fundamentals and policies, and a track record of implementing such policies.
PLL-eligible countries may face moderate vulnerabilities and may not meet the FCL qualification standards, but they do not require the same large-scale policy adjustments normally associated with SBAs. The PLL combines qualification (similar to the FCL) with focused ex-post conditions that aim at addressing the identified remaining vulnerabilities in the context of semi-annual monitoring. Duration of PLL arrangements can be either six months or 1-2 years. Access under the six-month PLL is limited to 250 percent of quota in normal times, but this limit can be raised to 500 percent of quota in exceptional circumstances where the balance of payments need is due to exogenous shocks, including heightened regional or global stress. 1-2 year PLL arrangements are subject to an annual access limit of 500 percent of quota and a cumulative limit of 1000 percent of quota. The repayment term of the PLL is the same as for the SBA.
Extended Fund Facility (EFF). This facility was established in 1974 to help countries address medium- and longer-term balance of payments problems reflecting extensive distortions that require fundamental economic reforms. Its use has increased substantially in the recent crisis period, reflecting the structural nature of some members' balance of payments problems. Arrangements under the EFF are typically longer than SBAs - normally not exceeding three years at approval. However, a maximum duration of up to four years is also allowed, predicated on the existence of a balance of payments need beyond the three-year period, the prolonged nature of the adjustment required to restore macroeconomic stability, and the presence of adequate assurances about the member's ability and willingness to implement deep and sustained structural reforms. Repayment is due within 4½-10 years from the date of disbursement.
Rapid Financing Instrument (RFI). The RFI was introduced to replace and broaden the scope of the earlier emergency assistance policies. The RFI provides rapid financial assistance with limited conditionality to all members facing an urgent balance of payments need. Access under the RFI is subject to an annual limit of 50 percent of quota and a cumulative limit of 100 percent of quota. Emergency loans are subject to the same terms as the FCL, PLL and SBA, with repayment within 3¼-5 years.
4.8 Voting Rights in the IMF
Fundamental decision making at the IMF uses a system of weighted voting in which member countries and executive directors cast different numbers of votes reflecting their respective financial contributions. It is well known that a property of such weighted voting systems (other examples are the EU Council of Ministers, shareholders' meetings in joint stock companies) is that a member's power - in the sense of its general ability to influence decisions - is not the same as its share of the votes. The system is designed to give power unequally to different members but its implementation might result in too much or too little inequality.
The most important decisions require special majorities of 85% of the votes, giving the USA - with over 17 percent - an effective veto. This very high majority requirement has been criticised as both likely to make the decision making system too rigid and also to be damaging to American sovereignty by making it easier for others to block US proposals. When the Bretton Woods system was being planned in 1943, John Maynard Keynes warned of this.
4.9 Criticism of the IMF
Over time, the IMF has been subject to a range of criticisms, generally focused on the conditions of its loans. The IMF has also been criticised for its lack of accountability and willingness to lend to country's with bad human rights record.
Many criticisms of the IMF include:
Conditions of loans: On giving loans to countries, the IMF make the loan conditional on the implementation of certain economic policies. These policies tend to involve:
- Reducing government borrowing - Higher taxes and lower spending
- Higher interest rates to stabilise the currency
- Allow failing firms to go bankrupt
- Structural adjustments - privatisation, deregulation, reducing corruption and bureaucracy
IMF's policies of structural adjustment and macro economic intervention make the situation worse. In 2001, Argentina was forced into a similar policy of fiscal restraint. This led to a decline in investment in public services which arguably damaged the economy.
Exchange rate reforms: When the IMF intervened in Kenya in the 1990s, they made the Central bank remove controls over flows of capital. The consensus was that this decision made it easier for corrupt politicians to transfer money out of the economy (known as the Goldman scandal). Critics argue this is another example of how the IMF failed to understand the dynamics of the country that they were dealing with - insisting on blanket reforms.
The economist Joseph Stiglitz has criticised the more monetarist approach of the IMF in recent years. He argues it is failing to take the best policy to improve the welfare of developing countries saying the IMF “was not participating in a conspiracy, but it was reflecting the interests and ideology of the Western financial community”.
Devaluations: In earlier days, the IMF have been criticised for allowing inflationary devaluations.
Neo liberal criticisms: There is also criticism of neo liberal policies such as privatisation. Arguably these free market policies were not always suitable for the situation of the country. For example, privatisation can create lead to the creation of private monopolies who exploit consumers.
Free market criticisms of the IMF: As well as being criticised for implementing 'free market reforms', the IMF is also under fire for being too interventionist. Believers in free markets argue that it is better to let capital markets operate without attempts at intervention. They argue attempts to influence exchange rates only make things worse - it is better to allow currencies to reach their market level.
There is also a criticism that bailout countries with large debt creates moral hazard. Because of the possibility of getting bailed out it encourages people to borrow more.
Lack of transparency and involvement: The IMF have been criticised for imposing policy with little or no consultation with affected countries.
Jeffrey Sachs, the head of the Harvard Institute for International Development said:
“In Korea the IMF insisted that all presidential candidates immediately "endorse" an agreement which they had no part in drafting or negotiating, and no time to understand. The situation is out of hand… it defies logic to believe the small group of 1,000 economists on 19th Street in Washington should dictate the economic conditions of life to 75 developing countries with around 1.4 billion people”.
Supporting military dictatorships: The IMF have been criticised for supporting military dictatorships in Brazil and Argentina, such as Castello Branco in 1960s received IMF funds denied to other countries.
4.1 0 IMF's Role in the Asian Crisis of 1997
During the Asian currency crisis of 1997, many countries such as Indonesia, Malaysia and Thailand were required by IMF to pursue tight monetary policy (higher interest rates) and tight fiscal policy to reduce the budget deficit and strengthen exchange rates. However, these policies caused a minor slowdown to turn into a serious recession with mass unemployment.
In the 1990s, the East Asian economies were widely heralded as the leaders of the global economy (the Tigers), economies whose average rate of growth would remain at 6 to 8 percent far into the future. When these economies crashed in the summer of 1997, the impact on the reigning ideology of globalization was massive. Perhaps the most shocking aspect of the crisis for people in the developing world was the social impact: over a million people in Thailand and some 21 million people in Indonesia found themselves impoverished in just a few weeks.
Suddenly, the IMF was widely discredited, seen as the architect of the capital account liberalization that created the crisis, and of the severe contraction that followed. The IMF was responsible too in large part for the worsening of that contraction, as it demanded that countries which had already plunged into depression should restrain government spending - exactly the opposite of sound advice for an economy in contraction.
Throughout the developing world, the January 1998 picture of Michel Camdessus, then the IMF managing director, arms folded, standing over Indonesian President Suharto signing an IMF agreement mandating harsh conditions of stabilization became an icon of Third World subjugation to a much hated suzerain.
So unpopular was the IMF that in Thailand, Thaksin Shinawatra and his Thai Rak Thai political party ran against it and the administration that had sponsored its policies in 2001, winning a lopsided victory for them and with it, inauguration of anti-IMF expansionary policies that revived the Thai economy.
In Malaysia, Prime Minister Mohamad Mahathir defied the IMF by imposing capital controls, a move that raised a howl from speculative investors but one that ultimately won the grudging admission of the IMF itself as having stabilized an economy in serious crisis.
Indeed, an IMF assessment eventually admitted - though in euphemistic terms - that its whole approach to the Asian financial crisis of fiscal tightening to stabilize exchange rates and restore investor confidence along the way was mistaken: "The thrust of fiscal policy turned out to be substantially different because the original assumptions for economic growth, capital flows, and exchange rates were proved drastically wrong."
The Fund's close association with the interests of the United States - it is often viewed as a vassal of the U.S. Treasury Department - further discredited the Fund.
One of the episodes during the Asian financial crisis that exposed the IMF as being essentially a tool of the United States was the battle over Japan's proposal for an "Asian Monetary Fund". Tokyo proposed the fund, with a possible capitalization of $100 billion, in August 1997, when Southeast Asian currencies were in a free fall.
The idea was to create a multi-purpose fund that would assist Asian economies in defending their currencies against speculators, provide emergency balance of payments financing and make available long-term funding for economic adjustment purposes. As outlined by Japanese Foreign Ministry officials, notably the influential Ministry of Finance official Eisuke Sakakibara, the Asian Monetary Fund (AMF) would be more flexible than the IMF, by requiring a "less uniform, perhaps less stringent, set of required policy reforms as conditions for receiving help." Not surprisingly, the AMF proposal drew strong support from Southeast Asian governments.
Just as predictably, the AMF aroused strong opposition from both the IMF and the United States. At the IMF-World Bank annual meeting in Hong Kong in September 1997, IMF Managing Director Michel Camdessus and his U.S. deputy Stanley Fischer argued that the AMF, by serving as an alternate source of financing, would subvert the IMF's ability to secure tough economic reforms from Asian countries in financial trouble.
Analyst Eric Altbach claims that some U.S. officials "saw the AMF as more than just a bad idea; they interpreted it as a threat to America's influence in Asia. Not surprisingly, Washington made considerable efforts to kill Tokyo's proposal." Unwilling to lead an Asian coalition against U.S. wishes, Japan abandoned the proposal that might have prevented the collapse of the Asian economies. The episode left many Asians very resentful of both the IMF and the United States
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