A veteran economist at the IMF has accused the global lender of suppressing information on difficulties in dealing with the global financial meltdown and eurozone crisis.
In a resignation letter to the IMF’s board and senior staff, dated Wednesday, Peter Doyle said the fund’s failures to issue timely warnings for both the 2007 to 2009 global financial crisis and the eurozone crisis were a “failing in the first order” and “are, if anything, becoming more deeply entrenched.”
His letter has brought to light simmering tensions within the IMF over its credibility, which many worry is threatened by its role in the eurozone crisis.
IMF insiders, who asked not to be identified, said the concerns are that the fund has over-stretched by lending to Europe without exercising the same level of independence it would normally apply in bailouts to emerging economies.
Doyle, a division chief for Sweden, Denmark and Israel in the IMF’s European Department when he resigned, also accused the fund’s leadership of being “tainted” by a selection process that always ensures that a European is at the helm.
He said the IMF had been “playing catch-up and reactive roles in the last-ditch efforts to save the eurozone from the brink.”
The IMF is part of a “troika” of international lenders, including the European Commission and European Central Bank, involved in rescue loans to Greece, Ireland and Portugal.
Doyle, who has worked for the IMF for 20 years, said the appointments of the fund’s heads over the past decade “have all too evidently been disastrous.”
“Even the current incumbent is tainted, as neither her gender, integrity or elan can make up for the fundamental illegitimacy of the selection process,” Doyle said of IMF managing director Christine Lagarde’s appointment last year as the fund’s first female head.
The IMF has acknowledged some of the failures cited by Doyle in reports in 2009 and last year that honed in on mistakes in spotting the roots of the global financial crisis and for not going far enough in warnings to policymakers of the impending crisis.
“Peter’s remarks are well documented in the public record, including reports issued by the Independent Evaluation Office, via the triennial review of surveillance, and in many statements by the managing director, including on the findings in these various reports,” IMF spokesman William Murray said.
“We have no evidence his views were suppressed, nor [that] any views were suppressed,” he added.
The last three heads of the IMF have all resigned before the end of their terms. Horst Koehler stepped down suddenly in 2004 to run for president of Germany. His successor and former Spanish finance minister Rodrigo Rato unexpectedly resigned halfway through his term in 2007 to return to Spain.
Former IMF managing director Dominique Strauss-Kahn quit last year after he was arrested in May of that year for alleged criminal sexual assault and attempted rape of a hotel maid, which he denied. Charges have since been dropped.
Strauss-Kahn’s push for an IMF role in the eurozone, including approval of big bailouts for Greece and Ireland as well as more flexible IMF conditions, caused tensions with some members of the fund’s board. Despite their concerns, many acknowledged that the IMF’s involvement was necessary to ensure stability of the global financial system.