Arab Today, arab today imf review faults premature crisis austerity push
Last Updated : GMT 00:56:26
Arab Today, arab today
Arab Today, arab today

Effective in calling for global fiscal stimulus

IMF review faults 'premature' crisis austerity push

Arab Today, arab today

Arab Today, arab today IMF review faults 'premature' crisis austerity push

International Monetary Fund office
Washington - Arab Today

The IMF gave leading economies faulty advice following the 2008 financial crisis, by directing them to cut spending and rely on central bank stimulus for growth, an internal policy review said Tuesday.
The review said that during 2010-2011 the Fund was premature in advocating austerity policies to countries including the United States, Britain, Japan and the eurozone.
The organization incorrectly assumed an economic rebound was already underway, the review concluded.
The Fund's Independent Evaluation Office said in the lengthy report that simultaneous support for central banks to pump out money to stimulate growth led to troublesome volatile capital flows in emerging economies.
"The IMF was effective in calling for global fiscal stimulus immediately following the Lehman collapse" in 2008, the IEO said.
"But it prematurely endorsed fiscal consolidation in large advanced economies, and, in parallel, encouraged reliance on expansionary monetary policy to stimulate demand."
"This policy mix was less than fully effective in promoting recovery and contributed to capital flow volatility in emerging markets."
The report assessed crisis-era policies that remain controversial, especially in Europe, and fuel ongoing political debates as the leading global economies struggle to boost economic growth.
The IEO noted that as the crisis began to spread globally in late 2008, the IMF became a "leading spokesman" for countries to boost their spending to fight the worldwide downturn.
"Fiscal stimulus was advocated not only for the countries at the center of the financial crisis but also for a much larger segment of the global economy, including euro area economies," it said.
"The fiscal expansion that followed is widely acknowledged as having contributed to shortening and dampening the recession."
But in 2010 the Fund changed its advice, arguing for fiscal consolidation. The Fund said spending cuts would allow large economies to reduce debt burdens that had mounted during the first years of the crisis.
At the time, the IMF was worried that large fiscal deficits and rising public debt would threaten fiscal solvency and prolong if not exacerbate the crisis, the IEO said.
But the Fund took that stance in the mistaken belief that economic growth in advanced economies would turn positive in 2010.
That turned out to be very wrong, as the eurozone's plunge back into recession showed.
The IEO said the IMF's policy focus at the time was also not well-founded.
"The policy mix of fiscal consolidation coupled with monetary expansion that the IMF advocated for advanced economies since 2010 appears to be at odds with longstanding assessments of the relative effectiveness of these policies" in the conditions that prevailed at the time, the report said.
- Switching financial gears -
The report acknowledged that the Fund, under criticism especially in Europe for advocating austerity, subsequently switched gears as the eurozone economy and the US continued to struggle.
"The evaluation recognizes that the IMF showed flexibility in reconsidering its fiscal policy advice when the growth outlook worsened."
Even so, policy makers in the leading economies continue to argue over boosting spending to speed up growth or leaving it to expansive easing policies by central banks to stimulate growth.
While the US Federal Reserve last week wound up its six-year-old asset buying operations, though without disposing of the trillions of dollars of bonds it now holds as a result, the Bank of Japan expanded its asset buying program.
On Thursday the European Central Bank is expected to consider whether its recently-launched easing program is enough. The Bank of England, like the Fed, has ended its buying operations without selling off assets.
Meanwhile in all four countries, politicians continue to battle over whether to increase spending.
Source: AFP

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today imf review faults premature crisis austerity push Arab Today, arab today imf review faults premature crisis austerity push

 



Arab Today, arab today
Arab Today, arab today Fadi Kataya explains secrets of  Nancy Ajram's newlook
Arab Today, arab today Messi visit will contribute in tourism

GMT 14:04 2017 Friday ,24 February

Messi visit will contribute in tourism
Arab Today, arab today Expresses Algerian history by woody figures

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures
Arab Today, arab today Mental conflict endures

GMT 07:36 2017 Friday ,24 February

Mental conflict endures

GMT 11:26 2017 Wednesday ,22 February

Dutch corporate takeover defences tough to breach

GMT 11:14 2017 Wednesday ,22 February

Lloyds Banking Group posts surging profits

GMT 10:01 2017 Tuesday ,21 February

Egypt pound rebounds from flotation slide

GMT 09:57 2017 Tuesday ,21 February

Greece agrees to bailout reforms compromise

GMT 09:55 2017 Monday ,20 February

Thailand 2016 growth up but below junta target

GMT 09:29 2017 Monday ,20 February

Kraft Heinz withdraws bid for Unilever

GMT 09:22 2017 Monday ,20 February

China's huge debt poses big headache for central bank
View News in Arabic - Business: أخبار الأعمال
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Reading therapy relieves mental disorders

GMT 15:39 2017 Friday ,24 February

Reading therapy relieves mental disorders
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Wafaa Amer is happy for Sherihan’s return

GMT 07:36 2017 Wednesday ,22 February

Wafaa Amer is happy for Sherihan’s return
Arab Today, arab today Milan laughs while Rome cries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 05:19 2017 Tuesday ,21 February

Salma Rashid happy for 'A Whisper of Love'

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 22:42 2017 Thursday ,23 February

Nasima Gamei revives heritage in jewelries

GMT 15:53 2017 Tuesday ,21 February

Small ponds have outsized impact

GMT 20:33 2017 Friday ,17 February

To release new antiques collection

GMT 07:51 2017 Wednesday ,22 February

Mom's immune system accepts babies

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday