Mar 12, 1998

FINANCE: CONSUMERS WARN AGAINST IMF POLICIES

 

Penang 11 March (Martin Khor) -- An Asian regional conference of Consumers International (CI) has called on the International Monetary Fund not to go ahead with proposals to amend its Articles to include obligations on capital account liberalisation. 

The conference also criticised the IMF's policy conditions for financially troubled East Asian countries which it said had caused great hardship to consumers, workers and the public. "Unless the IMF changes its present policies and becomes more transparent, there will be increasing pressure for it to be closed," the Conference participants warned in a concluding statement. 

The Consumers International member organisations also rejected any attempt to further liberalise foreign investment flows without regulation and obligations on corporations.  

"We are therefore against the current multilateral agreement on investment in the OECD," said the statement. "We are also against attempts to start negotiations on an investment agreement at the WTO."  

The three-day Conference on the Economic Crisis in Asia, which ended earlier this week, was attended by about a hundred representatives of CI member organisations and other NGOs, mainly from the Asian region.  

Among the participants were CI President Pamela Chan from Hong Kong, its director-general Julian Edwards, and leaders of consumer organisations from Indonesia, Thailand, South Korea, Malaysia, the Philippines, Hong Kong, Taiwan, Japan, India, Bangladesh, Pakistan, Nepal, Mongolia, Australia, Fiji and Mauritius.  

In a final session, the participants drew up and adopted a statement of conclusions that were highly critical of the way financial liberalisation in Asian countries had led to the economic crisis now burdening consumers with high prices and unemployment. 

According to the statement, the Asian crisis is due partly to domestic weaknesses such as over-investment in the property and share sectors, wrong government policies and patronage.  

However, it added, a large part of the problem has also been caused by over-rapid and misplaced financial liberalisation, especially as a result of some Asian governments allowing local banks and companies to borrow abroad without appropriate regulations.  

"We call on governments to review their financial liberalisation policies and reverse these where appropriate. In particular they should have regulations on flows on short-term speculative funds and on capital account transactions," said the statement. Governments, it added, must strengthen banking, financial and corporate laws and their implementation to ensure clean, efficient and transparent management and use of funds in order to safeguard consumer interests and the stability of the financial system.  

The consumer organisations said that the international community must respect the right of developing countries to determine their own policies on financial management including whether and when to liberalise.  

"Such policies should be determined without external pressures and must include the right to re-regulate if necessary. Since currency speculation has played a major role in the Asian crisis, consumers demand that the international community introduce effective measures to curb currency speculation."  

The concluding statement said: "In light of the Asian crisis, the IMF must not go ahead with proposals to amend its Articles to include obligations on members to liberalise their capital accounts, recognising that to place new obligations for liberalisation is not a responsible measure.  

"The IMF's conditions for tightening policy, including high interest rates, are causing great hardship to consumers, workers and the public. High interest rates and removal of subsidies on food and essential goods and services have caused great social dislocation.  

"Unless the IMF changes its present policies and becomes more transparent, there will be increasing public pressure for it to be closed."  

The statement also aid that "this meeting rejects any attempt to further liberalise international investment flows without commensurate regulation and obligations on corporations. We are therefore against the current Multilateral Agreement on Investment (MAI) at OECD." 

The consumers added: "We are also against attempts to start negotiations on an investment agreement at the WTO since this is unlikely to contain any obligations on investors."  

The participants also said that there should not be double standards in covering losses from unpayable foreign loans of Asian countries. Governments should not take on obligations for foreign loans of private non-bank business as this will put the burden unfairly on consumers and tax payers, the statement added.  

In the banking sector, the interests of foreign banks should not have precedence in negotiations to settle payment of foreign debt. 

The participants also urged consumers in Asian countries affected by the crisis to budget wisely by refraining from buying luxury items, especially on credit. Consumers should exercise choice to support local products and services in order to contribute to economic recovery.  

"Governments of developed countries should not put pressure on Asian developing countries affected by the crisis to disallow or discourage 'buy local' campaigns, as has occurred, for example, in Korea."  

According to the statement, the current economic crisis impacts on women in Asia more critically as individuals, as care givers of families and as income earners and food producers.  

Therefore, in their programmes for economic recovery, governments should give specific focus to women and include women in the development of strategies for recovery. To facilitate this process, consumer groups should strengthen the gender perspective on the economic crisis and mobilise women in these programmes.  

The participants also urges CI to give high priority to the issue of financial crises and the structure and effects of the global financial system as the Asian crises showed how such problems can cause so much suffering to ordinary consumers in the world.