Supporting IMF is in the U.S. interest Congress: Funding delayby Republicans limits rescue efforts for economically distressed nations.

July 23, 1998

RECESSION grips East Asia and Russia. Containing it, preventing it from infecting the world, extending the growth of the U.S. economy, is the challenge facing the International Monetary Fund. Its loans to central banks, in return for demanded reforms, are the world community's principal tool for imposing prosperity.

The IMF's most trenchant critics denounce it as too responsive to the United States. The least relevant criticism brands it as do-good foreign aid. IMF efforts, from the U.S. perspective, are meant to keep the wolf from our door.

So it was reassuring that even as Federal Reserve Chairman Alan Greenspan told one Senate committee that an $18 billion IMF bill was vital, another Senate panel was reaffirming its support.

But yesterday a House committee put off a vote until at least September. Majority Leader Dick Armey vowed to kill the bill. Speaker Newt Gingrich sees no agreement with the White House before the November elections. This time, the foot-dragging is not to assuage big business, a powerful Republican constituency, which supports greater aid for the IMF.

The IMF is fully engaged in Russia and Indonesia. On Monday, it approved an $11 billion loan to Russia, but delayed part of an installment until Russia implements loan conditions, which are being resisted by Communists in the Duma. The agency is demanding reforms in taxes, particularly in collecting them, and in banking -- harsh medicine that many of Russia's fat cats and top dogs resist.

In Indonesia, a $49 billion IMF bailout has progressively failed and been replenished, but banks collapsed and the rupiah plunged in value anyway. Last week, the IMF and rich nations promised $6 billion in low-interest loans. President B. J. Habibie agrees to conditions, but investors remain leery.

No one can promise such rescue efforts will always succeed. U.S. Treasury Secretary Robert Rubin is a leading designer of these bailouts, in the U.S. interest. Denying full payment of U.S. funds to the IMF helps Communists in the Russian Duma and demagogues elsewhere who want to shoot down much-needed economic reforms.

Pub Date: 7/23/98

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