Source: Center for Economic and Policy Research
A new discussion paper from the Center for Economic and Policy Research finds that 31 of 41 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. The pro-cyclical conditions noted in the report are either pro-cyclical fiscal or monetary policies.
“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, “IMF-Supported Macroeconomic Policies and the World Recession: A Look at Forty-One Borrowing Countries,” shows that in some cases, the IMF had relied on overly optimistic growth forecasts – significantly underestimating the impact of the world recession on borrowing countries. The paper also notes that in some cases the Fund later loosened its policy conditions after the economic performance was much worse than anticipated.
+ Full Paper (PDF; 809 KB)
