THE IMF in a changing world 1945–85 Margaret Garritsen de Vries international monetary fund, Washington DC, 1986, 225 pp.
| Date | 01 October 1987 |
| DOI | http://doi.org/10.1002/pad.4230070418 |
| Published date | 01 October 1987 |
Book
Reviews
413
devotes a great deal of attention to the potential impact of default on the western banking
system). This was expressed in the form of an endorsement
of
growth-only adequate
growth could ensure that a population's living standards increased
and
debt service would
be honoured. Such growth, however, had to be based on sound policies, which
is
why IMF
and IBRD involvement would be necessary in most cases, and was to be backed by more
resources; these were to come partly from the official institutions and partly from the
commercial banks. Meanwhile creditor governments were responsible for maintaining
responsible policies in the sense of adequate growth, less volatile exchange rates, lower
interest rates and no protectionism.
It
is
fair to ask, since it
is
now over a year since the book was written and since the
Baker initiative was launched, how far these good intentions have been fulfilled. The most
accurate answer would probably be to say that the jury
is
still out. One can certainly point
to a number of countries where successful financing packages have been put together based
on growth-oriented programmes
of
economic adjustment. It is also true to say that external
factors. in the form
of
lower interest rates and
oil
prices and a weaker dollar, have been
beneficial for most indebted countries. But it would be wrong to pretend that everything
is plain sailing. The current Mexican negotiations have been long and difficult and have
given clear evidence
of
fatigue on all sides. It is also the case that, in the aggregate,
commercial bank lending to the major debtors has not risen as envisaged.
This, then, leads to the question whether the solution proposed by Lever and Huhne-in
essence that there should be additional bank lending backed by government
guarantees-would provide
a
quicker way out of the labyrinth than Baker's route. Here
there
is
considerable scope for argument. For example, the contingent liabilities assumed
by governments, even
if
leading to no actual expenditure in the short term, would have to
be taken into account in any prudent planning
of
public spending. And in time, as the
banks took steps to write down their exposure, the whole LDC debt burden would be
transferred to creditor governments. Apart from the massive potential exposure involved,
this would hardly be a step in the direction
of
restoring normal commercial relationships
between creditors and debtors-for which the current approach is striving-but would lead
to the institutionalized direction
of
credit flows on a global scale with creditor governments
giving explicit credit ratings to their fellow debtor governments. In addition the scheme
does not appear to envisage any overall writing-off of debt,
so
the effect would be for even
more to be piled onto the structure, which we would all agree
is
already precarious in the
extreme.
But these expressions
of
scepticism should not put the reader off what
is
a timely and
thorough analysis
of
how we have got where we are today. On solutions there is clearly
room to differ; the more important thing-which Lever and Huhne help
us
to do-is to
agree with the analysis and the conclusion that there
is
a serious problem which cannot be
ignored. If understanding
is
present we should in the end be helped to reach a satisfactory
solution. R. G. WARE
Bank
of
England
THE IMF IN A CHANGING WORLD 1945-85
Margaret Garritsen de Vries
International Monetary Fund, Washington
DC,
1986,
225
pp.
Edited
by
Michael Posner
International Monetary Fund, Washington
DC,
1986, 189 pp.
PROBLEMS OF INTERNATIONAL MONEY, 1972-85
Both these books give an important understanding
of
the financial and wider economic
aspects
of
development.
The first is a revised and up-dated version
of
18
articles written by Margaret Garritsen
de Vries during the past
20
years for publication in
Finance
and
Development
and the
IMF
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