A report says the International Monetary Fund (IMF) praised the US economy despite a 2005 warning by its chief economist of a global financial crisis.
Dr. Raghuram Rajan, a world-renowned economist and an award-winning expert in the finance of economic growth, had warned that the world would plunge into deep financial crisis if it is not monitored, AFP reported.
A 51-page report by the fund's Independent Evaluation Office published Wednesday said that the IMF did little to act on Rajan's warnings and "failed to highlight the relevant vulnerabilities" in the US financial system.
The fund failed to take steps in monitoring US economy and improve surveillance, like including developed economies in programs adopted after the Asian financial crisis more than a decade earlier, but on the contrary the IMF acted like a cheerleader for the US, the report said.
"Despite the importance of the economic counselor's position, there was no follow up on Rajan's analysis and concerns -- his views did not influence the IMF's work program," it added.
The evaluation office also highlighted how the IMF "often seemed to champion the US financial sector and the authorities' policies, as its views typically paralleled those of the US Federal Reserve."
"The banner message was one of continued optimism after more than a decade of benign economic conditions and low macroeconomic volatility."
The Wednesday report explained how "the belief that financial markets were fundamentally sound and that large financial institutions could weather any likely problem lessened the sense of urgency to address risks or to worry about possible severe adverse outcomes."
The report is a damning criticism of the Washington-based body, which monitors economies around the globe as part of its mandate and warns of looming risks.