Can the IMF reform?
During the past couple of years, critics and supporters alike have questioned IMF’s relevance in today’s world. The IMF was last involved in a major, high-profile crisis scenario in December 2001, after Argentina defaulted on $81 billion of sovereign debt. Today, the unusual abundance of liquidity throughout the world has afforded emerging economies easier access to private capital. As a result, there is far less need for IMF funds. In fact, some major IMF debtors, such as Argentina and Brazil, have paid off their debt. Despite questions regarding the Fund’s relevance, its supporters are working hard to come up with new ideas. The most popular idea is that the IMF should focus on “surveillance” and anticipate when countries are about to hit a financial crisis. This surveillance would be conducted mostly through the IMF article IV consultations, the annual review done by IMF economists that assesses the country’s exchange rate, monetary and fiscal policies; financial sector issues; risk
