Банкеръ Weekly



Mr. Flickenschild, you will head the IMF Mission for Bulgaria in the beginning of 2004. How were you assigned to this position?- Before coming to Bulgaria, I worked as IMF Mission Leader for Croatia for five years. That was a very long period of time and it's not good for a person to work too long in the same place. My assignment was decided by the Fund, but I'm happy that I'm coming to Bulgaria.What kind of an agreement has Croatia signed with the IMF?- Croatia signed a precautionary agreement four years ago. Like any other agreement, it is based on performance criteria, macroeconomic magnitudes, structural changes. Previews are made periodically - for example, every six months. In the case of Croatia, we had to change the frequency of previews in the course of the programme because of external deterioration. After the preview, the government can ask for a tranche of the credit, if all criteria have been fulfilled. So you have experience in signing precautionary agreements. And you can tell us who is the person to decide whether a country needs such kind of financing?- The decision is made by the people in charge of the economic policy of the country. I don't know how it is made in Bulgaria yet, but in the case of Croatia the letter of intent is signed by three persons - the Governor of the central bank, the Minister of Finance, and the Prime Minister. The amount of the credit is negotiated during the talks between the IMF Mission and the government. On one hand, it depends on the condition of the balance of payments, and on the other, on the strength of the pole.Croatia, for instance, had problems with the balance of payment, so we financed this country to help it solve those problems.To look it technically, there are two types of programs in the precautionary agreements. In one of them, the government is paid 25% tranches of the agreed credit every quarter. In the second, each tranche depends on the strength of the difficulties the country is facing during the respective quarter. The bigger the problems, the larger the tranche. Which programme will be negotiated with Bulgaria depends on your Government, but I am not going to comment on that now, because Mr. Jerald Schiff is very much the person who heads the Fund's Mission right now. We can see from your biography that your whole career has passed in the IMF. How did it happen?- It happened accidentally. I had lots of options after graduating from high school. I decided to study business administration, but then I chose a university that was not able to provide me with a degree in this subject. So I chose the closest one - economics. I could be a doctor, a physician now, but economics just happened to be on my way. I used to teach economics in a university in the state of Lousiana. I've been working for the IMF for 32 years. I spent 18 of them in the Fund's Central Policy Department which sent me to many countries all over the world. I've been in Asia, Africa, Latin America, the Middle East. Then I moved to the European Department of the Fund. It may surprise you but I know Bulgaria since 1962. I was travelling with a friend and crossed your country on the way to Turkey, Syria, Lebanon. I'm also linked to your country through my birthplace. I was born in 1943 in the German town of Gotha, where the family of the Bulgarian Prime-Minister comes from. You have experience in the missions in many countries. Where was it most difficult for you?- It was difficult for the Fund to work in Zaire because of the corruption and the lack of economic data there. For me as a person it was most difficult in Bolivia, where I was sent to an IMF mission for the first time. At that time, the situation in the country looked very similar to the situation in Bulgaria in 1996-1997. Inflation was very high, it reached 23,500% within twelve months. The IMF had to work with the government in order to stabilize the economy, which happened miraculously in 1985. Figures changed very fast, balance-sheets virtually exploded, and it was particularly hard for a person who had no experience in such missions.Have you ever felt in danger?- No, I have never felt physically threatened. Even in Bolivia, where there were protests in the streets against the IMF.How will you explain the fact that people in most countries with which the Fund is working are not happy with the Fund's policy?- Usually we go to a country when the situation there is desperate. When time comes for changes in the policy, it is not the Fund that is responsible for a country's difficulties. If the Fund arrives, it means that the country has problems with its finances and needs to take some measures - either raise taxes or cut expenditure. Both types are harmful to the people, that's why they are not popular. Still, they are inevitably the only way out of the difficult situation. For the 32 years you've been working for the IMF you've had a very dynamic life. How does your family feel about it?- It is difficult to work for the Fund or the World Bank and have a normal family life. I have colleagues who even have their husband or wife working for the Fund or the Bank, too. For them it is even more difficult, because both partners travel a lot. My wife and I do not have children. She is an Indian and works for the Fund, too.You said you would not comment on the present IMF Mission for Bulgaria. But would you tell us what your economic views are - conservative or liberal?- It is difficult to give a definition. In fact, I'm quite pragmatic. On one hand, I'm conservative because I don't want to engage surpluses, but on the other, I'm liberal - I understand they are necessary for facing certain social needs. An economic program should provide a package of social measures without however getting you in trouble. When you increase spending in one field, you should restrict the money spent in another because of the budget restrictions. The IMF can advise a government to spend a little more on education or public services, for example, and less on special pensions for veterans or other particular groups of the society. But it is the government that always makes the decision and assumes the responsibility. Finally, I will tell you that I'm not so autonomous in choosing a policy as it might seem to you, nor is Mr. Jerald Schiff. There is a whole institution behind us, so we are not allowed to make big turns in following its policy.

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