Breaking Up With The IMF

With the end of the International Monetary Fund's $10 billion deal in Turkey, there's been much ado about the country's economic future. Some of it's warranted: Turkey was an IMF poster child, tackling inflation and reducing debt from 76 to 39 percent of GDP since 2001. But the country's political situation recently destabilized and its current account and trade deficits are rising.

While Turkey could still use the IMF's approval to reassure investors, a more interesting question may be how much the IMF needs Turkey. Its remaining debt to the Fund (about $7 billion) dwarfs that of the next largest borrower, Liberia ($500 million). But $7 billion is not what it used to be in the developing world, which underscores the IMF's struggle now that its target market has plenty of access to capital. "Turkey was the last very large program for the IMF," notes Desmond Lachman, an American Enterprise Institute fellow. No wonder the Fund plans to focus on its advisory role. If you can't lend, consult.

Breaking Up With The IMF | World