Economies need better IMF advice

If you think back 10 years ago to the East Asian financial crisis that began in Thailand and then spread all over the region, brought down Suharto in Indonesia and then hit other emerging markets such as Russia and Brazil, what is the main image you have of the International Monetary Fund (IMF)?

The managing director of the IMF was Michel Camdessus. His arm-folding took place during a ceremony in Indonesia in which that country's government was signing an agreement with the IMF under which it would receive a huge loan and in return it would cut its budget deficit and implement other austerity measures.

The photograph was later considered a notorious symbol of the supposedly imperialist ways of the IMF. A year or two later, I saw it displayed in the office of a senior Indonesian public official in Jakarta as a reminder of how bad things had become in 1997-98. It was also a reminder that whenever the IMF gets involved in solving a problem, its solution is always painful, with budget cuts at the top of its list of required actions.