The IMF is missing in action

According to the International Monetary Fund’s Articles of Agreement, the Fund’s main purpose is to facilitate the balanced growth of international trade and thereby promote high levels of employment and real (inflation-adjusted) income.

- Desmond Lachman

Yet with globalization facing its greatest threat in the postwar period, and with global external economic imbalances set to rise, the IMF seems to be missing in action. Instead of pursuing an active role in reducing external imbalances, it is focusing on issues that lie beyond its remit, such as climate change and gender equality.

Why hasn’t the IMF called attention to the principal reason for today’s global external imbalances? Contrary to what US President Donald Trump seems to think, these imbalances result not from import tariffs or exchange-rate manipulation, but rather from inappropriate macroeconomic policies maintained by deficit and surplus countries alike.