Letter to the Editor: Asian Crisis & Paranoid Feelings about the IMF

This article appeared in the Financial Times, November 17, 2004.
Sir, Stephen Grenville, an exemplar of the rational International Monetary Fund critic, informs us that the basic IMF model employed during the 1997 Asian crisis was sound (“Good advice gets a bad name in south-east Asia”, November 15); and that the IMF’s “inadequate” performance in Indonesia can be laid at the feet of “rather naive implementation”.

Mr Grenville goes on to conclude that the countries in south-east Asia should do as they please in the future, as long as they toe the line of the Washington Consensus. His account mirrors the perennial IMF storyline. In May 2004, the IMF’s Independent Evaluation Office published Mr Grenville’s consulting report “The IMF and the Indonesian Crisis”. It is remarkable not for what it says, but for what is swept under the rug.

In Indonesia, the mere mention of the IMF elicits what Mr Grenville labels “excessive paranoia”. Should the Indonesians’ paranoia be only moderate?

Steve H. Hanke,
The Johns Hopkins University,
Baltimore, MD 21218, US

Senior Fellow Steve H. Hanke is a professor of Applied Economics at the Johns Hopkins University in Baltimore.