WASHINGTON — Russia's ruble devaluation, just a month after promises of an additional $22.6 billion from the International Monetary Fund (IMF), underscores the fact that the rich nations are rapidly running out of solutions to halt a deepening global economic crisis.
United States officials insist the key, as always, is for the countries in trouble to take the painful reform steps necessary to put their economies back on track. But critics note that, so far, more than $100 billion in bailouts assembled by the IMF for troubled Asian nations, and the additional support for Russia, have not restored confidence.
A growing number of critics contend those economic troubles show that the old-time austerity religion preached by the IMF isn't working. "The whole purpose of an IMF program is to make up for foreign capital that is pulled out of the country," says Lawrence Chimerine, an economist at the Economic Strategy Institute, a Washington think tank. "It is silly to impose higher interest rates that make the domestic economy weaker."
But the Clinton administration continues to insist the only way for countries to restore market confidence is to tighten their belts.