Old Habits at the IMF

A new discussion paper from the Center for Economic and Policy Research finds that 31 of 41 of countries with current International Monetary Fund (IMF) agreements have been subjected to pro-cyclical macroeconomic policies that, during the current global recession, would be expected to have exacerbated economic slowdowns. …

“More than a decade after the Asian Economic Crisis brought world attention to major IMF policy mistakes, the IMF is still making similar mistakes in many countries,” CEPR Co-Director and lead author of the paper, economist Mark Weisbrot said. “The IMF supports fiscal stimulus and expansionary policies in the rich countries, but has a much different attitude toward low-and-middle income countries.” …

The paper’s authors do have praise for the IMF’s actions in one area: making available for borrowing some $283 billion of Special Drawing Rights (SDRs—IMF reserve assets that can be exchanged for hard currency) to member countries without conditions. The IMF’s unconditional lending and injecting liquidity into the world economy with the SDRs, in a time of world recession, represents an unprecedented step forward.

“The next step should be to eliminate harmful conditions attached to other IMF lending facilities,” the paper states.

Read the whole paper here.