This is the Cato Daily Podcast for Friday, June 4, 2010. I'm Caleb Brown. The IMF is meant

to help nations in the dire straits of brute luck, but this global lender of last resort

has seen a large chunk of its assistance flow to Greece,

which is a first world country caught in a predictable and self-made fiscal crisis.

Swami I R, a research fellow at the Cato Institute's Center for Global Liberty and

Prosperity explains the problem.

The IMF is in a position to lend to all its members that includes all the rich countries and all the

poor countries and all the middle income countries all of them are entitled to

borrow it's worth remembering that England had a very very large loan

program in 1975.

So it's not as though it lends only to poor countries.

It's another matter that since the Western world settled down,

all the currencies became hard and began to float. In effect, they don't have any

balance of payments problems, no shortage of hard currency. The IMF under its charter is only

supposed to lend for a balance of payments problems, right?

So the kinds of countries that are left with balance of payments problems in this world

have typically been middle- income countries and poor countries.

Those are the ones for whom the IMF has been lending.

The biggest chunk of IMF shareholding is owned by the Europeans together, put together, and they have always appointed the managing director.

What's happened right now is that because there is a fiscal problem in Greece and that fiscal

problem may extend to other European countries like Spain and

Italy, Ireland, Portugal. There is a crisis out there. It is not a balance of

...