An ailing world needs the IMF Crunch time: Congress' failure to replenish agency's funds weakens this country's economy.

September 03, 1998

THE FARM BELT could become the next victim of the spreading financial meltdown. Customers in Asia and Russia lack the funds to buy U.S. grains and chicken.

That is just one sign of Congress' folly in preventing the United States from making $17.9 billion available to the International Monetary Fund, which lends money to overextended governments in return for reforms.

The gyration of stock markets shows that globalization has occurred ahead of institutions to curb its excesses. The IMF may not be the best tool, but it is the only one that exists.

President Clinton's forlorn preaching of reform to Russians carried some weight only because of the IMF. His listeners understood he was speaking for the agency as well as for official Washington. Had the IMF been replenished by Congress, his message would have had more force.

The amount sought is $14.5 billion, along with contributions from other nations, to increase the funds that the IMF can call on by $60 billion, and another $3.4 billion, along with contributions from other nations, to open a $24 billion line of credit. Thus, U.S. money leverages more funds.

There is no question that the United States, trying to shore up beleaguered economies, is looking after its interests and the financial security of American workers, savers and investors.

The IMF is the lever the United States pulls to influence world markets and governments, and U.S. Treasury Secretary Robert E. Rubin, is the most influential shaper of IMF policy.

Free market reforms in Thailand, Indonesia and Russia were compelled by IMF loans approved by the United States, and would not have occurred otherwise.

There are questions about the efficacy of IMF operations, which have failed spectacularly to rescue Indonesia and Russia. The world crisis is not solved.

And some worry about the heavy IMF demands being placed on fragile Third World and formerly Communist economies.

Republican House Speaker Newt Gingrich of Georgia finds himself supporting the administration in requesting these funds while demanding IMF reforms.

He has been stalled by House Majority Leader Dick Armey, a Texas Republican, who covets Mr. Gingrich's job. The world economy, the United States included, has become a political football in an internecine Republican succession struggle.

Denying replenishment to the IMF would weaken the hand of the U.S. Treasury to deal with world monetary traumas.

This is contrary to the U.S. national interest and makes no sense. The IMF needs and deserves financial support from Congress.

Pub Date: 9/03/98

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