The IMF on Fiscal Policy: Staying the Course amidst Waves of Change

Abstract

The global crisis has prompted many reflections on economic policies and the role of international economic institutions. Whereas some changes are already in progress based on these, and others might be impending, the International Monetary Fund (IMF) was not prompt in revising its policy recommendations. With respect to fiscal policy, IMF recommendations continued on an unwavering course, although the rethinking in economic policy caused by the crisis combined with internal and external evaluations of IMF recommendations that have been implemented to create a demand for the reformulation of the IMF’s approach to fiscal policy. As denoted by its 2010 Article IV reports, IMF recommendations remained steadfastly committed to a single approach to fiscal policy, one focused on short-term fiscal tightness rather than on long-term development (Roy and Ramos, 2012). (…)