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The International Monetary Fund (IMF) should resist pressure from European Union leaders to take part in inadequate bailout programs for European countries, Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, wrote in an opinion piece in the Financial Times Friday.
Sovereign risk, along with poor growth and rising inequality, will continue to raise questions about the functioning of the global economy next year and the IMF will be in the spotlight, El-Erian wrote.
"There is no denying that too many of the adjustment programs it has overseen have fallen short of their objectives. Whether it jumped or was pushed, the institution sacrificed some of its own rules, including those previously deemed sacrosanct," he wrote.
"For two years, the IMF agreed to a series of programs that were partially designed, inadequately funded and, in some cases, even threatened its preferred creditor status. In each case, the IMF ended up supporting a weak attempt to muddle through, rather than a plan sustainable in the medium term," El-Erian added.
Earlier in December, European Union leaders agreed to boost the IMF's funds by 150 billion euros ($194 billion) to fend off the debt crisis but the fund has already taken part in bailouts for Greece, Ireland and Portugal and there were reports in November that it may be involved in a bailout of Italy if the country gets into trouble.
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