IMF Survey: In what ways has your diverse experience in the private and public sectors been useful in the IMF?
Aninat: The work of the Bretton Woods institutions is centered on development, stability, and growth issues. So my past experience—at the public sector level, as well as in the private sector and academia—has probably contributed to the development of abilities that help me cope with many of the more operational international development issues that we face today. From a practical point of view, my background helps me to contribute a certain way of decision making and vision within the collective of our management team. But, probably, my work during my six years as finance minister in Chile is most closely related to my work now.
IMF Survey: Since you have taken office, how has your perspective of the IMF as an institution changed?
Aninat: Having been an “outsider” to the IMF—Chile repaid the IMF in full in 1994, during my first year as finance minister, and we did not have an active program during the rest of my term—I confess I viewed the IMF as more monolithic in its way of thinking than I have found it to be in practice. Far more full-fledged, very open discussion goes on in selected committees or in broad groups before final decisions are made by the Executive Board and management. So one way my perception has changed is in recognizing the broader, more analytical, and open way of proceeding here.
IMF Survey: How successful has the IMF been in adapting to evolving trends, such as globalization, and to recent financial crises? And do you see a major change in focus in the future for the IMF?
Aninat: The IMF’s most recent and hardest experience was certainly the Asian crisis, which spread to Russia and Brazil. The IMF learned a lot as an institution from this experience. One lesson was the importance of monitoring developments more closely in the financial arena. Another is that we need to work with governments and other agents and recognize when and how these problems arise. I see a very strong mandate for the IMF to focus more deeply on surveillance—macroeconomic and financial monitoring—including in the banking, insurance, and services areas.
The IMF has adapted and evolved through time in a second way: with streamlining and changes in its facilities and with its involvement (along with the World Bank) in the Heavily Indebted Poor Countries (HIPC) Initiative and the Poverty Reduction and Growth Facility (PRGF). Our core task is and will remain centered on the macroeconomic level.
But because the IMF is the main coordinating international decision-making body in the world, it is difficult at this stage of world development for the IMF to simply say “no, we only deal with balance of payments problems and monetary and fiscal diagnosis.” The IMF is also a sort of “biological institution”; it has to evolve with the context from inside and outside.
IMF Survey: Among your responsibilities are relations with the international and regional organizations. What should be the relationship between the regional organizations and international ones like the IMF?
Aninat: Shortly after I came on board, I had the welcome opportunity to attend a United Nations coordinating session in Rome, where all UN institutions, dependencies, offices, and units met in a common meeting. I represented the IMF’s interests and reviewed the status of our collaboration and cooperation with the UN family. Two issues, in particular, struck me as being of importance. The first was security issues. We need to update our responses and review the new challenges that many of our mission teams face in politically complex regions, as well as in conflict, postconflict, and some of the transition countries.
The second issue is how to make the IMF’s mandate and its everyday tasks better known to the international community—not just the UN. Sometimes—and this might sound a little critical—we carry too much of our work and our discussions within closed walls. We need to practice the art of politics, which is nothing less than employing didactics and education. As an organization, we should push to make the world better understand our mandate. We need to publicize our success stories more widely to show what this institution has accomplished for hundreds of countries around the world. In this way, we make institutions, such as the United Nations and others, more sensitive to our needs and perspectives.
IMF Survey: How would you assess the prospects for continued development in Latin America?
Aninat: In the 1970s, Latin America had a moderate but still positive and respectable rate of GDP per capita growth. In the 1980s—which has been rightly called the “lost decade” because of the external debt problems and major macro shocks—average GDP per capita growth for Latin America was zero percent. In the 1990s, we have seen a robust recovery and progress on two main fronts—inflation and growth—as well as a lot of reforms and major technical assistance from the IMF, the World Bank, and other institutions.
The real test of all this progress is starting now—in the years stretching from 2000 to 2010. One big dimension is still lacking in Latin America: the pace of development in social areas. Without progress in this area, vulnerable citizens will be saying in the near future, “well, but what have I specifically gained from these reforms and this institutional reshaping?” We need inclusive growth: growth for most or all of the people, antipoverty measures, commitment to these measures, participation—not elite growth. This third stage is decisive for how the Latin American and Caribbean “semi-success” story will end in the medium term.
IMF Survey: People talk about the “Washington consensus” and say the IMF keeps pushing for a one-size-fits-all solution. Is this what you meant when you said you once perceived the IMF as being monolithic?
Aninat: OK, let’s start with the Washington consensus. It was an interesting set of propositions and concepts, and clearly a positive one, but with some strategic flaws. First, they should never have called it a “Washington” consensus, because that has provoked a lot of image problems that could have been avoided if we had had a “Mexico,” “Brasilia,” or “Santiago” consensus.
Second, the Washington consensus was a necessary way of setting better policies, especially in the fiscal, monetary, trade, and direct investment areas. But it stopped short of the next stage of problems that we are focusing on now. Most Latin American governments, for example, now know how to set correct macro policies and what needs to be done to keep the macroeconomy in balance. But no model should be viewed as a closed-ended paradigm, because the world changes.
The Washington consensus certainly did not take account of many of the financial problems that have arisen since the Asian crisis—volatility, vulnerability, intense short-term capital inflows and outflows. Nor did it provide any important ideas for integrating the social issues we are now more concerned with into the mainstream
On these social issues, I have been working with [President] Enrique Iglesias from the Inter-American Development Bank on the Social Equity Forum. We expect to meet in the spring of next year in Santiago. The idea is to bring together again some 45 high-level policymakers—including former presidents of the region, academics, and people from the multilateral institutions—to examine what room there is to sharpen our social policies, given existing resources, to bias the results of economic growth more strongly toward better distribution of income and opportunities; better quality of employment creation; and more integration in the social sectors of the economy. The Social Equity Forum is discussing not whether growth is necessary—we all agree on that—or what the mechanics are for achieving faster growth, but the more interesting and very hardcore question: how do we get better-quality growth? People do not only count and live on the traditional measures of GDP; they now prioritize key intangibles, such as security in the streets, social community participation, and educational services.
IMF Survey: What answer should we give to those segments of civil society that claim organizations like the IMF are actually threats to the welfare of the poorest people and to the environment? Is the IMF doing enough to respond to its critics?
Aninat: First, we have to remember that the IMF is owned by its 182 member countries. Not one of these countries has said: “No, now I want to be out of the IMF. I reject the programs.” So protest organizers are left with a puzzle: Should they direct their protests to the IMF or to the governments and central banks of member countries?
Second, cold statistics do not always provide the complete picture, but they help produce discussions that are objective, rather than subjective. If we avoid passion and look at the main statistics, we see that the world is in much better shape today than it was before the IMF existed or than in the 1960s and 1970s. In terms of inflation, growth, employment opportunities, and mobility of the people throughout the world, we have certainly made progress.
Third, the spirit of cooperation and collaboration needs to be underlined, because if this institution is owned by the world, then we have an obligation to listen with more open ears to what some of the civil society, nongovernmental organizations [NGOs], and labor movements have to say about us. But at the same time, our critics have to understand better what the actual functions of the IMF are and what the institution can and cannot do, based on its mandate, capacity, and resources. There is room for criticism and much room for improvement, but we have to be judged according to a fair standard.
IMF Survey: What would you hope to see come out of the large agenda facing the governors at the upcoming Annual Meetings in Prague?
Aninat: The spring meetings of the International Monetary and Financial Committee and Development Committee reinforced our understanding of the core task of the IMF and the World Bank. I saw a lot of declarations, discussions, and committees working for and supporting the IMF. All active participants called for a stronger IMF.
The task for the Prague meetings is to determine how to get a specific mandate from our governors and finance ministers, enabling us to effectively carry out these new responsibilities. For example, if we are to streamline facilities and make them more operational; if we are to enhance codes and standards; if we are to enter more into activities involving the global capital and financial markets, what political and resource support can our governors provide us? If we have a good solid week of discussions, committee meetings, and assemblies, we will get more precise guidelines of where our constituents want us to go in the coming year and into the longer term.
IMF Survey: One of your responsibilities in the IMF includes standards and financial system supervision and assessment. How do you see the IMF’s role evolving in this area?
Aninat: In this crucial area, we have been pursuing two sets of efforts. One is the use of macroprudential indicators as an active component of surveillance. The other is the Financial Sector Assessment Program [FSAP], which we are carrying out jointly with the World Bank and outside experts. This program is also related to our work on the reports on observances of codes and standards. All of these activities are being conducted in collaboration with international standard-setting bodies. What is the aim? The objective is to build up, gradually but with solid stepping-stones, a new international financial architecture that aims at further reducing the risk of systemic crisis. This work is a natural supplement to our core macro task of surveillance. It is crucial for the years to come.
IMF Survey: How effective are the HIPC Initiative and the PRGF in sustaining growth and reducing poverty?
Aninat: Here we have an important venture by the IMF and the World Bank. The World Bank takes the lead, and naturally so, in the in-depth social work and accompanying sectoral indicators for the HIPCs. The IMF’s PRGF provides the macro context within which these new debt-reduction programs, related to poverty issues, are now developed. The PRGF is thus a key instrument.
At the same time, we have to recognize a certain tension, in that these facilities have created a desire of some countries to move even faster on the debt reduction provisions in the HIPC/PRGF and, at the same time, the need to direct the results of the debt reduction to the reduction of poverty. The IMF and the World Bank now face the special challenge of dealing with these tensions to advance to a deeper stage.
We also have to address some criticisms that have been directed at the new strategy of debt-reduction and poverty-reduction programs. These criticisms relate to areas over which the IMF has rather little control—the issues of ownership and governance in the recipient countries. We have seen a few cases in Latin America and in Africa where some programs have encountered slippages—fortunately now all being corrected and re-addressed. But here the IMF can play only an indirect role: we have to make sure that these macroframeworks are firmly in place, commitments are honored and monitored, and end results match desired aims. But these are not our programs. They are country programs, built with, it is hoped, the large and broad participation of civil society, including NGOs, in the recipient countries. In our dialogue with governments, we have to keep urging them to take stock of further commitments in delicate areas such as governance, participation in design, and focusing of the programs to true end beneficiaries. Basically, some of the criticism directed at the IMF and the World Bank really—and unfortunately—falls back onto some of the recipient countries. That is the plain, hard truth.