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australia and imf (1 Viewer)
- Thread starter marsenal
- Start date
-=«MÄLÅÇhïtÊ»=-
Gender: MALE!!!
imf doesnt directly impact on aus coz imf acts in the event of a currency crisis. And aus hasnt had a currency crisis...yet.
But if CAD blows out we will.
But if CAD blows out we will.
!meeee!
Member
the imf affected us in the asian crisis by stepping in to lessen the spillover effect and prevented it impacting us as extensively as it could have
apart from that the imf and aust don't have much of a connection. the imf have forecasted strong growth for aust in 2003 (that looks doubtful now tho) and they say our currency is grossly undervalued (probably true)
but that's about it
apart from that the imf and aust don't have much of a connection. the imf have forecasted strong growth for aust in 2003 (that looks doubtful now tho) and they say our currency is grossly undervalued (probably true)
but that's about it
B
Bambul
Guest
The IMF lends to governments around the world that run budget deficits and need to finance them. Usually they are developing countries (in Africa, Latin America, Asia, etc) which the financial markets will not lend to, or will lend to at very high interest rates (eg. 20% or more). In exchange these governments must make reforms to their economies, structural changes such as privatisation, deregulation, labour market decentralisation, removal of subsidies, etc. (I'll talk more about this later on in my post)
It also does it for Australia. The IMF has recommended that Australia increase the retirement age to 65, include the family home in age pension means testing, wind back the Pharmaceutical Benefits Scheme, tackle the abuse of family trusts, reduce the gap between company tax (30%) and the top marginal rate of tax (47%) either by cutting income tax to 30% or introducing a withholding tax on dividends, cut tariffs on highly protected industries (automobiles and TFC), less generous safety net wage rises for low skilled, introduction of secret ballots to discourage strikes and lossen unfair dismissal laws.
The difference for Australia is since we don't have to borrow from the IMF we can ignore what they say (and in many of those reforms, rightly so), whereas developing economies have little choice, take the reforms or fade into insignificance.
Therein lies the major problem. While many of the reforms would improve the effectiveness of the market to increase economic growth and improve living standards, many of these developing countries are fragile and need to mature before these reforms are put in place. Instead of encouraging market forces, it can crush their industries, resulting in their collapse, the emergence of counterproductive monopolies, or the loss of ownership to overseas shareholders.
And since developed countries can ignore this, it just adds to the problems. European countries often outcompete their North African neighbours in the agricultural industry, helped by subsidies which the African farmers do not receive. During the Asian crisis, the IMF told governments to run surpluses and increase interest rates to fix their external position. South Korea refused, and ran exapnsionary macroeconomic policy. Today South Korea has almost recovered back to its pre-crisis growth rates whilst other SE Asian economis remain in the doldrums.
Now, not all the reforms are bad, I should point that out. But there is a lot of debate between economst over what is the best avenue for these countries to follow and whether the current system is doing more harm in the long term than good.
So to answer your question, Australia is not really directly affected by the IMF. At most the IMF indirectly affects Australia by influencing Australia's trading partners, particularely those in SE Asia.
It also does it for Australia. The IMF has recommended that Australia increase the retirement age to 65, include the family home in age pension means testing, wind back the Pharmaceutical Benefits Scheme, tackle the abuse of family trusts, reduce the gap between company tax (30%) and the top marginal rate of tax (47%) either by cutting income tax to 30% or introducing a withholding tax on dividends, cut tariffs on highly protected industries (automobiles and TFC), less generous safety net wage rises for low skilled, introduction of secret ballots to discourage strikes and lossen unfair dismissal laws.
The difference for Australia is since we don't have to borrow from the IMF we can ignore what they say (and in many of those reforms, rightly so), whereas developing economies have little choice, take the reforms or fade into insignificance.
Therein lies the major problem. While many of the reforms would improve the effectiveness of the market to increase economic growth and improve living standards, many of these developing countries are fragile and need to mature before these reforms are put in place. Instead of encouraging market forces, it can crush their industries, resulting in their collapse, the emergence of counterproductive monopolies, or the loss of ownership to overseas shareholders.
And since developed countries can ignore this, it just adds to the problems. European countries often outcompete their North African neighbours in the agricultural industry, helped by subsidies which the African farmers do not receive. During the Asian crisis, the IMF told governments to run surpluses and increase interest rates to fix their external position. South Korea refused, and ran exapnsionary macroeconomic policy. Today South Korea has almost recovered back to its pre-crisis growth rates whilst other SE Asian economis remain in the doldrums.
Now, not all the reforms are bad, I should point that out. But there is a lot of debate between economst over what is the best avenue for these countries to follow and whether the current system is doing more harm in the long term than good.
So to answer your question, Australia is not really directly affected by the IMF. At most the IMF indirectly affects Australia by influencing Australia's trading partners, particularely those in SE Asia.
-=«MÄLÅÇhïtÊ»=-
Gender: MALE!!!
"the imf affected us in the asian crisis by stepping in to lessen the spillover effect and prevented it impacting us as extensively as it could have"
actually, the imf's handling of the azn crisis was a disaster itself. It did not lessen the impact. They forced the azn countries to adopt a contractionary stance during a time of economic recession. Can u imagine the economic growth and desire to buy aussie exports after that's been done?
actually, the imf's handling of the azn crisis was a disaster itself. It did not lessen the impact. They forced the azn countries to adopt a contractionary stance during a time of economic recession. Can u imagine the economic growth and desire to buy aussie exports after that's been done?