Everyone remembers the famous photo of January 15 1998

Everyone remembers the famous photo of January 15, 1998. Indonesia's President Suharto signed under the gaze of the Director General of the international monetary Fund (IMF), Michel Camdessus, an agreement between his country and the multilateral institution to redress the economy in exchange for a new loan. An image associated by many with the "diktat" of the IMF and will contribute to highly degrading its image in Asia, then in the midst of the crisis. More than ten years after, the crisis is global and IMF back in business. Over the past two years, he concluded with many countries loan agreements. Its new Director General, Dominique Strauss-Kahn, has endeavoured since its function, in November 2007, re-brand the institution and restore its credibility. On March 29 and announced a "major review" of its policy of loans and the "end of the structural performance criteria". In brief, loans from the Fund are made available to the country at the same time as the reforms proposed by the experts of the multilateral institution are conducted. Other instruments such as the line of flexible credit granted to countries with good economic policy have been created. The terms of loans were also relaxed.

Fact remains that the IMF seems to pasted tried schemes today similar to what he advocated in the past. The Fund stopped these last months of advocating a Keynesian stimulus of type "contra-cyclical" to halt the recession. But for clients borrowers, "pro-cyclical" measures generally involving an increase in interest rates, a reduction in public spending and a freeze of wages are advocated, that contribute to the economic slowdown. Such austerity and sanitation measures imposed are, first, on local populations.

Economic slowdown

A recent study (1) published by the Center for Economic and Policy Research (CEPR), one of the largest centre for European research bringing together about 700 international economists on 41 countries in relation to the IMF, shows that 31 of them were subjected to pro-cyclical policies which, during the recession, should lead to an even more pronounced slowdown said countries. Sometimes as in Hungary, or Latvia, says the study, social movements have led to that Fund relax its conditions. "More than a decade after the Asian economic crisis has alerted world opinion on the major errors of economic policies advocated by the IMF, again fund the same mistakes in a good number of countries," said one of the directors of the CPAC, Mark Weisbrot. And further: "The IMF supports budget reminders and expansionary policies in developed countries but takes a different approach with regard to low income and middle income countries."In the case of the Latvia study, the pro-cyclical policies were designed, inter alia, to maintain the link between the Latvian currency and the euro. A policy is not reminiscent to the Argentina during the deep recession of 1998-2002 where the fixed rate between the peso and the dollar has defended tooth and nail until the inevitable fall. In Argentina and Latvian cases, the necessary adjustment could be done through a contraction of the economy and a decline in real wages. For Mark Weisbrot, the purpose of the loans from the IMF during a global recession should be, as far as possible, to provide sufficient reserves so that the borrowing countries can continue the expansionary macroeconomic policies as the rich countries to minimize the loss of jobs and production. This is not the case for everyone.