The plan is yet another effort to convince the "electronic hordes" of foreign investors and currency speculators who can plunge an economy into recession with the click of a mouse to be a little less flighty. The contingent credit lines are supposed to assure the money manipulators that there's no need to panic. If the IMF considers a country creditworthy, and the country has ready cash to support its currency, then investors can leave their money where it is –- thereby stopping the exodus before it starts. Lest its will be considered weak, the IMF will consider only countries already blessed by private banks, and the preapproved credit lines will carry higher interest rates, to deter cavalier borrowing. If the plan works, it will minimize the next panic by separating healthier emerging economies like Mexico's from the so-called "submerging" economies such as those of Russia or Indonesia, and focus the markets' punishments where they're deserved. But as anyone watching tech stocks will attest, you can lead the hordes to logic, but you can't make them think.
WASHINGTON: Even with the Asian economic flu currently in remission, the International Monetary Fund knows its treatments over the last two years did as much harm to its patients as good. So the global economy's lender of last resort kicked off its spring meetings Sunday with what it hopes will be a better vaccine. Perhaps unsurprisingly for the U.S.-led institution, the plan was one the Clinton administration had put forward in October at the height of the crisis: "contingent credit lines," which would make IMF loans available to countries before a crisis strikes. The catch: Only deserving countries -– ones with economic policies the IMF deems sound -– will get "preferred" access to the cash in the first place.