Semi-annual meetings of the two institutions have kicked off in Washington, with IMF chief Christine Lagarde making a passionate plea for free trade, while downplaying differences with the Trump administration.The International Monetary Fund (IMF) and World Bank spring meetings started on Thursday bringing the two multilateral institutions’ 189 members face-to-face with the unusual challenge of a US government noisily at odds with some of their most important positions, including free trade, financial regulation and climate change.
The IMF in particular has sounded warnings against Trump’s “America First” agenda which aims to shrink US trade deficits with potential measures to restrict imports. The fund has argued in its latest economic forecasts that protectionist policies would crimp global growth that is starting to gain traction.
Opening the meetings in Washington, IMF Managing Director Christine Lagarde said that the IMF would press for “a fair and level playing field,” adding that this meant “no use of distortive measures, no protectionist measures.”
“The IMF is not a trade organization, but we are concerned about trade because it has been a major engine for growth,” Lagarde noted.
At the same time, she sought to downplay differences with the Trump administration, saying that from the various contacts that she’d had with the administration so far, “I have every reason to believe we will make progress.”
In addition to warnings on trade, the IMF on Wednesday unveiled two studies pointing out dangers from fiscal proposals that Trump is considering. These included warnings that his tax reform ideas could fuel financial risk-taking and raise public debt enough to hurt growth.
Sharing the spoils of growth
In her opening remarks, Lagarde also acknowledged the discontents of globalization and the political winds it has whipped up in recent years, saying the fund would press for policies that make growth more equitable.
“We need to make sure that this momentum is sustained and that we continue to have that growth and, more importantly, that that growth is shared more equitably,” Lagarde said.
The IMF chief recommended that countries should implement fairer taxation, job training assistance and infrastructure investment as well as forward-looking measures to address unsustainable debt and pension schemes.
“All countries, of course, should guard against what I have called the self-inflicted wounds, such as restrictions, subsidies and other trade distortions that reduce competition and economic openness,” she added.
The global crisis lender this week bumped up its forecasts for global growth slightly to 3.5 percent for this year, a rare upward revision reflecting a rosier view of conditions in Asia and Europe.
uhe/kd (Reuters, AFP)