ICP Asks UN about the US Federal Reserve and IMF, Pingfan Hong Is Pro Yellen & Quota Reform

By Matthew Russell Lee

UNITED NATIONS, May 21 -- The UN has a position on the US Federal Reserve, it emerged on May 21, at least a position favoring new Fed chair Janet Yellen over her predecessor Ben Bernanke.

  Inner City Press asked Pingfan Hong of the UN Department of Economic and Social Affairs about DESA's mid-year update of the UN World Economic Situation and Prospects, which called on the Fed to communicate more clearly as it tapers away from quantitative easing -- does the UN favor an audit of the Fed, and what of the impact on tapering QE on emerging markets? Video here.

  Pingfan Hong recounted that an IMFC meeting he attended, Yellen admitted to negative impacts on emerging markets, which he said Bernanke obfuscated by claiming positive impacts too. (Bernanke now is speaking at $250,000 dinners, so criticism from DESA may not concern him.)

  Inner City Press also asked Pingfan Hong about the WESP's call for the implementation of IMF quota reform -- was this really related to the IMF's ability to lend to Ukraine, and what are its economic impacts?

  Pingfan Hong replied that it is more of a “long term” issue, but that countries should follow through on what they commit to. What about democracy, though? And what about democratizing the Federal Reserve? We'll have more on that. Watch this site.

   

In India, As IMF Suggests Relaxing Ban on Proprietary Trading, Gonzo De-Regulation?

By Matthew Russell Lee

UNITED NATIONS, February 20 -- In the wake of the global financial meltdown, one expected most advice to regulators to consist of being more stringent. 

  But today's International Monetary Fund "Article IV" report on India, under embargo until 9 am, says at page 12 for example that "the relaxation of restrictions that reduce the depth of the onshore forwards and futures markets would be beneficial."

  The specific restriction that IMF is urging to relax are described in a footnote as "restrictions includ[ing that] banks have been banned from proprietary trading in domestic currency futures and exchange traded options; margin requirements on domestic U.S. dollar-rupee forward trades were doubled to 100 percent; and FIIs and NRIs cannot trade currency futures in India."

  So a ban on propriety trading in India, the IMF wants to be relaxed? By contrast, when asking nearly anything about the United States -- about the debt ceiling, for example, or more recently tapering - the IMF says that it entirely a domestic matter to be decided by domestic authorities. 

  And questions posed by Inner City Press two weeks ago, for example about the crisis in South Sudan (where Indian peacekeepers are serving, and have this year been killed) remain unanswered. (In fairness, a question on Romania was belatedly answered, and reported here.)

  On his way to last April's International Monetary Fund - World Bank meetings in Washington, India's Finance Minister P. Chidambaram stopped in New York City on Wednesday, and Inner City Press asked him about IMF reform. Video here.

  Inner City Press asked specifically about quota and governance reform. Chidambaram replied that the “review is incomplete because the US has not voted.”

And that remains the case, ten months later.  Watch this site.

IMF Criticizes Bolivia Banking Law As Undercutting Profitability, Defers to US Federal Reserve on Tapering, Ignores Africa Questions

By Matthew Russell Lee

UNITED NATIONS, February 10 -- The International Monetary Fund has just released its Article IV review of Bolivia, in which it criticizes the country's new Financial Services Law, specifically that

"the law’s general thrust is to subordinate financial sector activities to social objectives with instruments that could create risks to financial stability. Main features of the law include: (i) provisions to regulate lending rates and set minimum lending quotas for the productive sector and social housing; (ii) discretion to set floors on deposit rates; and (iii) mechanisms to enhance consumer protection and financial access in rural areas."

  Inner City Press asked the IMF's Mission Chief for Bolivia Ana Corbacho to explain this criticism, and more generally to reconcile Bolivia's and President Evo Morales' public critique of the IMF with this visit. 

  In response to a question from Inner City Press at UN headquarters last month, Morales recounted how the IMF dominated Bolivia in the past, but now decision making had passed from the "Chicago to the Bolivia boys."

  The IMF staff report says they met with "Minister of Economy and Public Finances Arce, Central Bank President Zabalaga, Minister of Planning Caro, other senior public officials, and representatives of the private sector. Mr. Tamez and Ms. Kroytor (LEG) provided inputs on the new Financial Services Law at headquarters."

  The IMF staff report also says that "the instruments chosen (interest rate caps and minimum credit quotas) could reduce the profitability and lending funds of financial institutions, over-leverage target beneficiaries, and complicate the conduct of monetary policy."

   Ms. Corbacho, on an embargoed press conference call largely in Spanish on which only three media asked questions, replied that Bolivia for example capping interest rates might impact financial institution's profitability and thus "financial stability."

   She said the government responded that financial inclusion has not progressed fast enough and so they are taking these steps. She the Article IV discussion, which are held with each IMF member, were "very open and frank" with Bolivia, and thus positive.

  To Inner City Press, the IMF's willingness to question consumer protection in Bolivia stands in contrast to the IMF's deference to the US on the how to manage and communicate the Federal Reserve's tapering, the debt ceiling -- anything, essentially.

  This IMF position was propounded at last Thursday's IMF media briefing, at which questions on Africa -- the Sudans, Areva in Niger -- submitted over the Online Briefing Center by Inner City Press were not taken by IMF Spokesperson Gerry Rice, nor answered afterward by IMF staff. This is how the IMF is operating; we will have more on this. Watch this site.

   

IMF Defers to US on Debt Ceiling and Tapering, Ignores Questions on Sudan, Iran, Areva & Niger, Dodges on Lagarde Being Grilled

By Matthew Russell Lee

UNITED NATIONS, February 6 -- Money talks. The International Monetary Fund on February 6 was asked about the US debt ceiling, and about how Federal Reserve moves have hurt emerging markets. To both questions, IMF spokesperson Gerry Rice said these are entirely matters for the US authorities: the IMF wouldn't dare to make suggestions.

  Of course, with other countries the IMF does nothing BUT make suggestions, requiring raises in taxes and cuts in pensions, for example, as a condition for tapping assistance.

  And then the IMF too often does not even take questions about such countries. Even Gerry Rice acknowledged, at the end of the July 6 bi-weekly briefing, that he had been remiss in taking online questions from journalists not in the room in Washington. (His solution was to take a question on another European country, Portugal.) 

   On Ukraine, Rice said the IMF is ready with "support" for economic reforms that would "revive growth." He said the IMF is always independence, "as you know."

  Inner City Press from the UN submitted questions on South Sudan, Iran, Armenia, Romania and Niger, where French firm Areva is being asked to stop under-paying for uranium. Rice did not take this question; he also dodged or deferred a question about Christine Lagarde being questioned by French investigators on January 31.

In fairness, the IMF is not always unresponsive. Two weeks ago, just for example, they answered  the Press on Afghanistan. The blind spot most often seems to be Africa. We'll have more on this.