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IMF fueled E.Europe crisis to get work-Czech cbanker

Published 04/02/2010, 03:00 AM
Updated 04/02/2010, 03:12 AM

VIENNA, April 2 (Reuters) - The International Monetary Fund fueled the economic crisis in emerging Europe last year to create a situation in which it would be asked to help bail out the region, a Czech central banker was quoted as saying on Friday.

The Fund, which led the rescue of former Communist Hungary, Latvia, Ukraine and Romania, misinterpreted data as it was seeking a task under its new management, Czech deputy governor Mojmir Hampl told Austrian daily Der Standard in an interview.

"It's ridiculous that it was the IMF, of all people, who acclerated the crisis," Hampl said. "This was an apparent attempt to bring about a bail-out of an entire region."

"Before this crisis, (the IMF had) virtually no clients. With this crisis and the new leadership under Dominique Strauss-Kahn, the Fund found a new job and got more funds."

Hampl said the IMF, like others, highlighted data that exaggerated the exposure of western European banks to the region because they ignored the fact that the loans of western banks' subsidiaries were to a large extent covered by local deposits.

"The misinterpretation by the IMF was particularly unpleasant, and it had to correct those data after we intervened," he said.

Hampl reiterated his central bank's view that there was no rush for the Czech Republic to join the common euro currency, neither from the Czech side nor from euro zone members.

"The demand for new euro zone members has dropped in the crisis," he said. "The decision about Estonia will show the way. It could get more complicated than it was for Slovenia and Slovakia."

He warned that joining the euro was not a panacea for emerging Europe's countries: "Some think that as soon as they have joined the euro, they can breathe again. This leads directly into the Greek scenario."

"The founding fathers of the euro thought that it would accelerate structural reforms," he said. "The Greek example shows that the opposite is true." (Reporting by Boris Groendahl; Editing by Tomasz Janowski)

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