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. Last Updated: 07/27/2016

IMF, World Bank Face New World Problems

WASHINGTON -- Curbing corruption and coping with crises have moved up the agenda at the World Bank and International Monetary Fund as the two institutions try to come to terms with a changing world.

The IMF, viewed by the old Soviet Union as a tool of exploitative capitalism, now has 181 member states, including virtually all the former communist ones. The two institutions, created toward the end of World War II, start their annual meetings next week in Hong Kong, now part of communist China.

The fall of communism in Europe brought new tasks for the fund and the bank as countries in central and eastern Europe and then in the former Soviet Union sought cash and advice to transform their centrally planned economies.

But a handful of these countries are now ready to do without IMF loans, and currency turmoil in the so-called tiger economies of Southeast Asia has created new challenges. The focus of operations is changing again.

"I think that over the years, particularly in central Europe, our relations will evolve more toward the direction of that with Western countries," the IMF's first deputy managing director, Stanley Fischer, said at a recent news conference.

"We will still be available for emergencies, the program will still be available if they get into trouble, but the rest of it will be an advisory or surveillance role."

That surveillance role worked poorly in Thailand, where monetary sources complain that the authorities ignored increasingly blunt recommendations that they ease currency restrictions and curb a rising current account deficit.

Thailand sought IMF help reluctantly after its currency, the baht, crashed in July and a $17.2 billion loan package was then hastily put together, drawing on funds from the IMF, the World Bank and a cluster of countries in the region.

Another change in how the two institutions work has been a new emphasis on the need to crack down on corruption, adding guidelines on graft to the raft of things the two already measure when they decide on loans.

"There is now general agreement that corruption is a major barrier to economic development in most economies," said World Bank guidelines on governance approved earlier this month.

The World Bank, condemned in its early years for funding multibillion-dollar development projects without consulting people affected, has also changed its policy to involve firms and the community as well as the governments who pay its bills.