Crisis-plagued Rato fights to the end

Washington: International Monetary Fund managing director Rodrigo de Rato's term virtually came to an end with yesterday's IMF policy-setting meetings.

France's Dominic Strauss-Kahn will take over the IMF helm from November 1.

De Rato, who resigned two years before the end of his full term, is leaving at a time the IMF is facing mounting criticism of its lack of reforms and its ineffectiveness as a world body when a global financial crisis sparked by US subprime mortgage defaults erupted in July-August.

Too late

At a press conference on Saturday, Rato defended the IMF's performance. "We've been vigilant and outspoken on these issues," he said.

De Rato noted that the fund had warned last April about lax supervision and the lack of transparency in securities based on US subprime mortgages.

The IMF was forced to go on the defensive yesterday when finance ministers from emerging markets charged that the world fin-ancial watchdog was asleep because it practices double standards when it comes to its surveillance role. The Group of 24, which consists of the world's developing nations, in their joint communiqué publicly criticised the IMF for failing to recognise the subprime problems in the US. The nations called for even-handed implementation of the IMF's surveillance.

"They underscored the need to improve the fund's surveillance of advanced economies, putting as much focus in evaluating their vulnerabilities as it does in emerging market economies," the G24 communique said.

Too little, too late

The IMF's Global Financial Stability Report from April included a lengthy discussion of the financial risks from the spillover of subprime mortgage defaults, but that was two months after the first big market sell-off caused by the problems of US subprime securitisations.

Earlier IMF financial stability reports, which are issued every six months, did not highlight spillover risks to the global financial system from the bubble in US subprime mortgages.

The reports, however, did talk about the direct economic risks from the decline in the US housing market on investment and spending.