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