Singapore and the IMF
September 2011. Washington, DC. The headquarters of the International Monetary Fund. Europe is on the edge of a financial panic. Greece is drowning in debt. The US is heading toward a fiscal cliff. Japan just got hit by an earthquake and tsunami. And the person chairing the room full of the world’s most powerful finance ministers is from Singapore.
This is part of my retelling of “50 Years of Singapore and the United Nations” (Tommy Koh, Li Lin Chang, Joanna Koh, 2015, ISBN: 978-9814713030).
Chapter 20 is written by Chia Der Jiun, who served as Executive Director for Southeast Asia at the IMF from 2011 to 2013. He gives a concise account of how Singapore went from a new IMF member receiving technical assistance to a country chairing the organization’s most important policy discussions.
The Man in the Chair
The central figure of this chapter is Tharman Shanmugaratnam, Singapore’s Deputy Prime Minister and Minister for Finance. In early 2011, his international peers selected him to chair the International Monetary and Financial Committee (IMFC).
The IMFC is basically the steering committee of the IMF. It has 24 Finance Ministers and Central Bank Governors representing 188 member countries. They meet twice a year and their discussions shape global economic policy. The people in that room include the US Treasury Secretary, the President of the European Central Bank, Germany’s Finance Minister, Japan’s Finance Minister, and the Governor of the People’s Bank of China.
Not a small meeting.
When the IMFC met in September 2011, the world economy was in what they called “a dangerous phase.” The Euro-area sovereign debt crisis was spreading. The US was stuck in political gridlock over its deficit. Growth had slowed everywhere.
Over two days of frank discussions, Tharman steered the group toward consensus. The IMFC called on Euro-area countries to strengthen their crisis management. It pushed advanced countries to restore sustainable public finances while also pursuing structural reforms.
Why Singapore Could Chair This Room
Chia explains the success factors pretty clearly. It wasn’t magic. It was a combination of things.
First, Singapore’s own track record. Decades of sound economic and financial policies gave the country credibility. Nobody could argue that Singapore didn’t know what it was talking about when it came to managing an economy.
Second, Tharman personally had deep knowledge of international economic issues and strong relationships with ministers and officials around the world.
Third, and maybe most important: Singapore was seen as objective and fair. When you chair a room full of people with opposing views, the one thing everyone needs to trust is that you won’t take sides.
Here’s a telling detail. IMFC members asked Tharman to stay on beyond his three-year term for a fourth year. That’s unusual. They wanted him there until March 2015.
The 2010 Governance Reform Problem
One of the trickiest issues Tharman had to handle was the 2010 IMF Governance Reforms. The idea was straightforward: emerging market and developing countries had become much more important in the global economy, so their voting shares at the IMF should increase.
The problem? The US Congress wouldn’t ratify it. Year after year, nothing happened. Other countries were getting frustrated.
In April 2014, Tharman did something creative. He convened a joint IMFC-G20 meeting to address the delays. There was real tension. Countries that were waiting for reform had different ideas about what to do. Tharman managed to rally both groups around a compromise: give the US more time, but set a hard deadline of December 2014. After that, alternative options would be on the table.
The US missed the deadline. And as promised, discussions about alternative approaches began in early 2015. The process held together because the agreement was clear and the deadline was real.
Singapore Joins the IMF
Of course, Singapore’s story with the IMF goes back much further than 2011. Singapore became a member in 1966, just a year after independence. In those early years, the IMF provided technical assistance on financial issues. As Singapore grew, the relationship became more of a partnership.
For a country like Singapore, the IMF matters a lot. Singapore is a small, open economy that depends on trade and capital flows. When the global financial system gets unstable, Singapore feels it directly.
During the 1997 Asian Financial Crisis, Singapore’s economy went into a technical recession. When the Euro-area crisis hit years later, Singapore’s trade got hit again. Even when your own house is in order, you’re not safe from the world’s problems if your economy is plugged into the global system.
Helping Indonesia in the Asian Crisis
When the Asian Financial Crisis exploded in late 1997, Indonesia was one of the hardest-hit countries. The rupiah collapsed. Capital was fleeing. The banking sector was under severe stress.
The IMF, World Bank, and Asian Development Bank put together an 18 billion dollar loan program for Indonesia. Singapore, along with several other countries, contributed to a second line of financing. That backup line was never actually used, but being there mattered.
Chia acknowledges that the IMF made mistakes with its policy conditions in Indonesia. The IMF itself has admitted this and drawn lessons for later programs. But his bigger point is this: without some credible institution that can mobilize resources quickly and require reforms, crisis-hit countries have no way to restore confidence. Bailout money without reform just gets burned through.
Training the Region
Right after the Asian crisis, Singapore and the IMF set up something practical: the IMF-Singapore Regional Training Institute (STI) in May 1998.
The idea was simple. Officials across Asia-Pacific needed better training in macroeconomic management, banking supervision, public finances, and statistics. The IMF had the expertise. Singapore had the location and infrastructure. Countries in the region wanted IMF-level training without the political baggage of being in an actual IMF program.
Since its establishment, the STI has trained more than 10,000 officials from over 40 countries. That’s a lot of people going back to their home countries with better skills for managing their economies.
Hosting the 2006 World Bank-IMF Meetings
The Annual Meetings of the World Bank and IMF are held outside Washington only once every three years. Countries compete to host them. Singapore expressed interest early and campaigned for it.
When Singapore was selected, it kicked off four years of preparation. This was a massive event. Over eight days, Singapore hosted 20,000 participants. That’s five times larger than the WTO Ministerial Meeting Singapore hosted in 1996. Finance ministers, central bank governors, top academics, business leaders, media from everywhere.
Singapore pulled it off. The reviews were strong, with compliments about both the substance and the efficiency. But the lasting significance was a policy outcome. At the 2006 meetings, the IMF Board of Governors adopted the “Singapore Resolution.” This called for completing IMF governance reform within two years. Those reforms, completed in 2008, were the first real step toward giving emerging market countries a stronger voice at the IMF.
So the city-state that hosted the meeting also gave its name to the resolution that changed how the IMF works. Not bad for a country smaller than most people’s commute.
Why This Chapter Matters
This chapter tells a clear story of progression. Singapore went from receiving IMF technical help in the 1960s to chairing the IMF’s top policy body in the 2010s. That arc took about 45 years.
But the real lesson is about how a small country can have outsized influence. Singapore doesn’t have the economic weight of the US or China. It can’t throw money around. What it has is credibility, competence, and the ability to be seen as a fair broker. In a room full of people who don’t trust each other, the person everyone trusts to be fair gets the chair.
About the Author
Chia Der Jiun is an Assistant Managing Director and Head of the Markets and Investment Group at the Monetary Authority of Singapore. He oversees the management of Official Foreign Reserves and the implementation of monetary policy. From 2011 to 2013, he served as Executive Director for Southeast Asia at the IMF in Washington DC, representing the 10 ASEAN countries and three others on the IMF Executive Board.
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