Wor­ries over Trump poli­cies cloud start of IMF, World Bank meet­ings

The New Age (Gauteng) - - BUSINESS -

WORLD fi­nance lead­ers are gath­ered on US Pres­i­dent Don­ald Trump’s home turf to try to nudge his still-evolv­ing poli­cies away from pro­tec­tion­ism and show broad sup­port for open trade and global in­te­gra­tion.

The IMF and World Bank spring meet­ings bring the two mul­ti­lat­eral in­sti­tu­tions’ 189 mem­bers face-to-face with Trump’s Amer­ica First agenda for the first time, just two blocks from the White House.

“These meet­ings will all be about Trump and the im­pli­ca­tions of his poli­cies for the in­ter­na­tional agenda,” for­mer IMF board of­fi­cial Domenico Lom­bardi said.

He said that IMF MD Chris­tine La­garde is aim­ing to “so­cialise” the new ad­min­is­tra­tion to the IMF’s agenda and in­flu­ence its pol­icy choices.

The IMF in par­tic­u­lar has sounded warn­ings against Trump’s plans to shrink US trade deficits with po­ten­tial mea­sures to re­strict im­ports, ar­gu­ing in its lat­est eco­nomic fore­casts that pro­tec­tion­ist poli­cies would crimp global growth that is start­ing to gain trac­tion.

Trump ad­min­is­tra­tion of­fi­cials are now push­ing back against such warn­ings by ar­gu­ing that other coun­tries are more pro­tec­tion­ist than the US.

Trump launched the week by sign­ing an ex­ec­u­tive or­der to re­view Buy Amer­i­can pub­lic pro­cure­ment rules that have long of­fered some ex­emp­tions un­der free trade agree­ments and by lash­ing out at Cana­dian dairy re­stric­tions.

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 risk­tak­ing and raise pub­lic debt enough to hurt growth.

Mak­ing tax re­forms “in a way that does not in­crease the deficit is bet­ter for growth”, said IMF fis­cal af­fairs di­rec­tor Vi­tor Gas­par.

The ad­vice may sim­ply be ig­nored, es­pe­cially af­ter US Trea­sury Sec­re­tary Steven Mnuchin last month in­sisted that an anti-pro­tec­tion­ism pledge be dropped from a Group of 20 com­mu­nique is­sued in Baden­Baden, Ger­many, for­mer head of the IMF’s China de­part­ment Eswar Prasad said.

“The IMF has lit­tle lever­age since its lim­ited tool­kit of anal­y­sis-based ad­vice, per­sua­sion and peer pres­sure is un­likely to have much of an im­pact on this ad­min­is­tra­tion’s poli­cies,” Prasad, now an in­ter­na­tional trade pro­fes­sor at Cor­nell Univer­sity said.

Mnuchin’s de­ci­sion against nam­ing China a cur­rency ma­nip­u­la­tor last week re­moved one con­cern for the IMF ahead of the meet­ing. La­garde also noted on Wed­nes­day that the IMF would lis­ten to all of its mem­bers, and work for “free and fair” trade.

La­garde is set to in­ter­view Mnuchin on stage dur­ing the meet­ings this week. – Reuters

PIC­TURE: AFP

EYE ON FAIR TRADE: IMF man­ag­ing di­rec­tor Chris­tine La­garde is spear­head­ing a push to nudge the world’s fi­nance lead­ers to com­mit to greater free trade.

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