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Last Updated: Thursday, 3 July, 2003, 10:35 GMT 11:35 UK
IMF appoints new chief economist

By James Whittington
BBC World Service business reporter

Professor Raghuram Rajan
Countries must be allowed to have their say, says Professor Rajan
In recent years, the International Monetary Fund has been embroiled in a global debate about how effective its polices of free trade and market economics have been.

Critics have become increasingly vocal in promoting the view that the Washington-based institution has been pushing advice and loans which benefit rich countries more than poor ones.

Meanwhile, its supporters argue that the Fund is misunderstood and its advice is not followed properly.

The new man appointed on Wednesday to take over the influential position of chief economist at the Fund is no stranger to a bit of controversy.

Raghuram Rajan is best known for a book he helped to write entitled: "Saving Capitalism from the Capitalists".

The IMF has to caution... to put a country on the right economic path
Raghuram Rajan

In this he argued that the world's business elite want to rig so-called free markets in their favour to make the rich richer and the poor poorer.

Such views will be warmly supported by developing countries who are the main recipients of IMF money and advice.

But they are unlikely to go down well with the United States government which is the most powerful voice on the executive board at the IMF.

Professor Rajan said he was surprised to be asked by the Fund to take the job as chief economist.

He has promised to not let his political views get in the way of economic arguments.

Striking a balance

"There is a line between where you venture on the economic front and where you start including what should be right in the realm of the local politicians... that line is very fuzzy but it has to be drawn," he told the BBC.

"You must let people of the country have their say in determining a number of issues. But sometimes they impinge on the economic and financial stability of the country.

"The IMF has to caution on those issues and sometimes demand certain actions to put a country on the right economic path."

An Indian national who is currently a professor of finance at the Chicago Graduate School of Business, Professor Rajan is due to take over from the current chief economist at the IMF Kenneth Rogoff making the debate over the institution's future more interesting.

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