Australian Financial Review / By Joanne Gray, Washington
Just days before he starts a "listening tour" of Asia, the International Monetary Fund's new managing director, Mr Horst Koehler, has hinted that the global lending agency should narrow its focus to crisis management.
In the face of scorching criticism that the IMF was a heartless money lender concerned only about having its loans paid back on time, Mr Koehler's predecessor, Mr Michel Camdessus, tried to shift the IMF more towards long-term development and poverty reduction.
Mr Koehler, a former finance official and head of the European Bank for Reconstruction and Development, said he would set up a review group to reassess the IMF's role.
At his first press conference, given last week, he stressed that while the World Bank and the IMF must work very closely together, "there must be a clear division of labour where each side knows which its core responsibilities are".
The IMF's original mandate was for it to step in to help solve balance of payments problems. But along with the World Bank, it is now involved in longer-term lending and in far-reaching economic reforms in the developing countries to which it lends. The IMF and the World Bank are also working closely together on plans to write off a large portion of the developing world's debt.
According to Reuters, Mr Koehler said he believed the IMF's core responsibility was "in the financial field - monetary issues, exchange rate issues and everything else linked to the financial sector - and I will put a lot of stress on building up a dialogue with the private financial sector".
This contrasts with Mr Camdessus, who had emphasised before he left office that the IMF should "listen to the voices of the poor".
But many experts on the Bretton Woods agencies had forecast this potential IMF overlap with the role of its sister institution, the World Bank, whose long-term mission is to alleviate poverty.
The United States in particular has been hostile to an expansion of the IMF's mandate, and US Treasury secretary Mr Larry Summers called recently for the IMF to narrow its focus and concentrate on short-term lending. Mr Summers has rejected even more radical proposals from Congress for the IMF to stop long-term loans altogether and charge higher interest rates.
Mr Koehler got the job after a nasty scuffle between the US and Europe over a successor to Mr Camdessus.
Mr Koehler also said he would put more emphasis on tapping the potential of the private capital markets "for boosting growth and fighting poverty in developing countries".
He has already toured Latin America and will visit Indonesia, Korea and Thailand, three of the Asian countries that were swept up in the Asian economic crisis in 1997-98 and which had to accept multibillion-dollar bailout packages orchestrated by the IMF.:
