ABSTRACT
A banking crisis broke out in the Dominican Republic less than a year after its FSAP had been completed. FSAPs have not always led to “timely changes to forestall problems”, the IMF’s Independent Evaluation Offi ce noted (IEO 2006a: 12). One may see such ‘missed opportunities’ as a sign that the FSAP is not and never will be ‘bullet-proof’. Or one may regard such instances as the result of ‘exceptional’ circumstances beyond the gaze of an FSAP. This latter option is the course taken by the IEO in the case of the banking crisis in the Dominican Republic. The Dominican banking crisis was “triggered by the discovery of massive fraud”, the IEO notes, and as an FSAP cannot be “expected to detect accounting fraud”, it cannot be blamed for not foreseeing the crisis (IEO 2006a: 40). In fact, the FSAP did diagnose “severe and widespread vulnerabilities in the Dominican banking system”, the IEO stresses; these conclusions just never had the effect on policy that they should have had (ibid.). On one hand, the IEO argues that an FSAP cannot possibly detect the types of problems that triggered the Dominican banking crisis. On the other hand, it argues that the Dominican FSAP did in fact identify “severe vulnerabilities” and fl ag “warning signs”—and that by ignoring these the Dominican government set itself up for the crisis (ibid.). The inconsistency of the IEOs account-arguing that the FSAP couldn’t possibly identify severe vulnerabilities but did in fact do so is troubling in itself, of course. Even more troubling, however, is the overall gist of the narrative: absolving the FSAP and the international institutions behind it of blame, and attributing blame one-sidedly to the local authorities.
