Peter Doyle a top economist at the International Monetary Fund was sharply critical of the Fund in his resignation letter. Doyle said the process of selecting the head of the organization was illegitimate
Peter Doyle served as an economist in the International Monetary Fund for 20 years. In his resignation letter Doyle is very critical of his employer both for the manner in which the head of the organization is chosen and also of its performance. In particular, Doyle believes that the IMF did not provide sufficient and sustained warnings about the impending global financial crisis especially in Europe. Doyle's letter of resignation can be found here.
Doyle uses surprisingly negative terms such as "incompetence",and "failings" in describing the performance of the fund over a ten year period. He also speaks of appointments for the IMF managing director as being "disastrous". Doyle was the former adviser to the European Dept. of the IMF.
This department runs the bailout programs for Greece, Ireland, and Portugal. Doyle maintains that the IMF delayed issuing warnings about the global and European financial crisis.The IMF did have investigations that made similar criticisms but in much milder language. The IMF also issued some warnings but Doyle maintains that they should have been earlier, and more sustained. He also suggests that warnings were at times actively suppressed.
Doyle describes the process of choosing the managing director of the IMF as tainted. This is not so much a personal attack on any particular director as a forceful repetition of a common criticism of the very elitist behind the scenes method by which the director is chosen. Doyle writes:"Even the current incumbent [Christine Lagarde] is tainted, as neither her gender, integrity, or elan can make up for the fundamental illegitimacy of the selection process."
Europe and the U.S. the big power brokers in the IMF have an understanding that the head of the IMF will be a European and of the World Bank an American chosen by the U.S.
Many have criticized the decision process particularly developing countries. In 2011 the world's largest developing countries, the BRIC nations, issued a statement declaring that the tradition of appointing a European as managing director undermined the legitimacy of the IMF and called for the appointment to be merit-based.
While the BBC was not able to reach an IMF representative for comment CNN in the U.S. reports that an IMF spokesperson said that there was nothing to substantiate claims made by Doyle. Certainly there is evidence to substantiate Doyle's claims concerning the process for selection of the head of the IMF. There has been constant criticism of the IMF from various sources.
Decision making in the IMF is correlated with contributions to the fund. Wealthier countries such as the U.S. give the most and have the most clout. Poorer countries who often borrow from the IMF have little say. As a condition for receiving loans the IMF often imposes austerity policies. For example, Jeffrey Sach's work shows that "the Fund’s usual prescription is 'budgetary belt tightening to countries who are much too poor to own belts'"
Joseph Stiglitz who was former chief economist and senior vice president of the World Bank has been quite vocal also in criticizing IMF policies. Stiglitz holds that the IMF's purpose was designed to provide funds to countries to carry out Keynesian reflations. However the fund became hostage to neo-liberal and monetarist policies. As Stiglitz puts it the IMF was reflecting the interests and ideology of the Western financial community.” This is hardly surprising since it is countries where those interests prevail that fund the IMF and then use it for their own policy interests. It is a case that whoever pays the piper calls the tune. Except that it is the taxpayers in funding countries who pay the piper eventually and they have little say in calling the tune!