Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
IMF Survey: Symptoms of a "Failed Relationship"
March 23, 2007
Pedro Malan (left) speaks with the heads of the IMF and World Bank (photo: Steve Jaffe/IMF).
Comment on Malan Report
Dear IMF Survey:
Your article on the Malan Report (IMF Survey, March 19 2007) was forthright and accurate up to a point. The understandable point at which the article fell short was in conveying the basic thrust of the report by Pedro Malan and his colleagues. My reading of the report, adjusting for diplomatic niceties, was that it strongly indicted the Bank and the Fund for the way they have been doing business together over the past 25 years. Relations between the institutions have been dominated by rivalry, a lack of trust, and mutual disrespect starting at the top with ripple effects and the further erection of barriers at the level of the Boards, Department heads, and staffs. The strange "concordat" language was symptomatic of a failed relationship.
The indictment is not primarily directed at Managing Director de Rato or President Wolfowitz, who only recently assumed their positions, but they now have the responsibility to implement the recommendations: close and continuing cooperation throughout the institutions; mutual support rather than turf fights; rewards for joint efforts and staff exchanges; greater specialization on the basis of comparative advantage in particular in the area of financial sector issues (an issue that an earlier outside IMF committee chaired by William McDonough, who was also on this committee, failed to address); and a more rational approach to technical assistance. One would hope that the administrative budgets of both institutions might contract as a result.
What the Malan Report hinted at in its discussion of mutual challenges, but did not state directly, is that the Fund and the Bank had better hang together or they will become increasingly irrelevant and be hung separately.
Sincerely,
Edwin M. Truman
Senior Fellow
Peterson Institute for International Economics