…and Nielsen responds to the IMF

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IMF responds to Nielsen accusations

Sir,

Thomas Dawson is the IMF spokesman. His letter is the institutional answer to my article. I find it misleading and regrettable.

It is misleading because although it is true that several papers from the Fund’s staff and even from the improperly denominated Independent Evaluation Office referred to the role played by the IMF in the Argentine crisis, these only cover events up to the first quarter of 2002 at the most. My article is the only one I know that covers Argentine events starting on May 1 2002 and going through to November 28 2005.

Regarding leakages and misconduct, there were many streaming from the IMF on different occasions. I will only point out two in addition to the one described in my article. Early on, we noticed that the monetary policy steps, which were discussed and agreed with the IMF, turned out to be ineffectual.

We soon found out that the agreed-upon monetary programme, which became the script of our monetary policy, had been carefully leaked to economic and financial consultants in Buenos Aires, which meant that all market participants were aware of it and could anticipate our monetary policy moves.

The second example was the leak of the briefing file prepared for Horst Köhler’s visit to Argentina in June 2003. Those papers made it to the front page of a leading economic newspaper, and the more critical parts of it were used by our opponents at ease. I recall Köhler’s anger at the time. Both leaks were subject to internal investigations, whose results led nowhere, just as in the case – mentioned in my article – involving the now defunct Capital Markets Department.

I stand by what I described, which are utterly facts.

I find it regrettable that the IMF claims that my descriptions constitute “charges without merit”, as per the Fund’s investigation. Much to its regret, the Fund is not a court of law, and my descriptions are not “charges”.

From my own experience I know that the Fund is ill prepared to understand the concept of “conflict of interest”. This probably stems from its culture, which crystallizes in the structure of the agreements it reaches with countries. In the agreements, the conditions of the programmes are set, but controversies and interpretations of the agreement, as well as compliance reviews, are only effected by the Fund, never by the relevant country, and never by third parties or arbitrators of any sort. As such, the Fund is very much used to being both a party to whatever contract and/or controversy arises, and the judge of such contract or controversy.

It is regrettable that the IMF continues to regard it as absolutely natural to “investigate” facts regarding its own behaviour, reach a conclusion favourable to its own position, label it as “final and conclusive”, and then expect other parties to recognize its findings as the final and ultimate truth.

Guillermo Nielsen

Minister of finance, City of Buenos Aires
(Formerly secretary of finance for Argentina)

“Inside Argentina’s financial crisis”, March 2006