THOMAS C. DAWSON,
Sir, - Professor Stiglitz's charge ("Economist criticises IMF for grovelling to US", August 11th) that the IMF caters to the interest of large countries or of financial markets has no basis in fact.
From the twin budget and current account deficits of the 1980s to the recent Farm Bill, the IMF has not shrunk from criticising the United States - or other large shareholders. We are now urging the "Big 3" Euro-area countries to fully comply with the Stability and Growth Pact.
And after years of advocating faster bank restructuring in Japan, an IMF team was invited to take an inside look to better analyse the problem.
Contrary to myth, international investors are seldom "bailed out" by the IMF. Investor-losses in the first year of the Asian crisis totalled as much as $200 billion, while their 1998 losses in Russia amounted to about $100 billion.
Moreover, the IMF has often championed policy innovations that have been costly for investors. During the 1980s debt crisis, the IMF pressured commercial banks to reschedule their loans, and later played a pivotal role in the Brady Plan to write-down the value of these debts. Today, the IMF is developing a proposal for a new debt-restructuring mechanism, opposed by leading creditor groups, to allow countries to negotiate write-downs of their international bonds.
No economy can prosper without investment, which will not remain where bad policies promise poor returns. Recognition of this sometimes unpleasant reality should not be confused with siding with the financial community. - Yours, etc.,
THOMAS C. DAWSON, Director, External Relations Department, International Monetary Fund, Washington, D.C., USA