The IMF and East Asia: the legacy of the crisis and actions for the future
This chapter explores the background against which criticism of the International Monetary Fund (IMF) persists in Asia so many years after the financial crisis of 1997-98. After acknowledging the achievements of the IMF in East Asia, it revisits the IMF’s adjustment programs in the management of the crises in Indonesia, Korea and Thailand, trying to identify where it went wrong, if at all. The chapter examines common criticisms of the IMF one by one and argues that criticism of the fund based on its errors in the handling of the crises is mostly unfair, given what it knew and what it could do at the time. The real failure of the IMF was elsewhere. Instead of accepting the errors with humility, it remained defensive and refused to engage in frank and constructive dialogue with stakeholders in Asia. As a result, the IMF missed the opportunity to regain trust in the East Asia region and saw its effectiveness diminish.