In an effort to respond to the global financial crisis, the G20 grouping of major economies dramatically strengthened the role of the International Monetary Fund in developing countries, including in low-income countries, by tripling the Fund’s resource base from US$250 billion to US$750 billion. The IMF’s concessional lending capacity to LICs will be ten times higher in 2014 than before the crisis. Despite pledges to address the crisis in flexible and innovative ways, the IMF’s key objective in crisis loans remains "macroeconomic stability" through the "tightening of monetary and fiscal policies".
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The report "Bringing Human Rights to Bear in Times of Crisis: A human rights analysis of government responses to the economic crisis" aims to deepen our understanding of how governments have conducted themselves and how effective economic policies have been in defending and strengthening the enjoyment of human rights in a time of multiple and interlocking social and economic crises. The information, views and recommendations presented in this report are derived from the responses to a questionnaire, along with complementary research conducted on specific measures and country responses.
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In the world of economics and finance, revolutions occur rarely and are often detected only in hindsight. But what happened on February 19 can safely be called the end of an era in global finance. On that day, the International Monetary Fund published a policy note that reversed its long-held position on capital controls. Taxes and other restrictions on capital inflows, the IMF’s economists wrote, can be helpful, and they constitute a "legitimate part" of policymakers' toolkit.
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Less than 10 days from José Mujica's inauguration as the second leftist president in Uruguayan history, the International Monetary Fund (IMF) attempts to discipline the next government with orthodox recommendations: to reduce public expenditure and lower fiscal deficit. According to the agency’s representatives, in the five-year budget to be adopted next year Uruguay should "return to more ambitious [fiscal] targets". To that end, it should "restrict" the rise in spending, as strong public wages increases are not sustainable.
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The International Monetary Fund experts have historically advocated for the free movement of capital. However, the international pressure caused by the crisis has led to a change in tone from the IMF technicians. A report by an IMF working group entitled "Capital inflows: The role of controls", claims that in certain circumstances, "capital controls are a legitimate component of the policy response to surges in capital inflows", a way to curb investments that can destabilize the economy through excessive currency appreciation or the formation of asset bubbles.
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In a paper published this week, "Rethinking Macroeconomic Policy", the International Monetary Fund chief economist Olivier Blanchard recognises that the Fund was wrong in some of the macroeconomic policies advised in the last three decades. Stringent macroeconomic policies – such as very low inflation, neglecting the crucial role of fiscal policy, and financial sector deregulation – often attached as conditions to IMF loans for developing countries, are now listed among the old sins that made a bad crisis worse.
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