Socrates & the Pope: Overheard at the IMF’s Spring Meetings


By IMFdirect editors

Socrates’ famous method to develop his students’ intellect was to question them relentlessly in an unending search for contradictions and the truth—or at the very least, a great quote.

The method was alive and well among the moderators, panelists and audiences of the IMF’s Spring Meetings seminars that took place alongside official discussions, where boosting high-quality growth, with a focus on the medium term, was at the top of the agenda.  Our editors fanned out and found a couple of big themes kept coming up.  Here are some of the highlights.

Monetary policy 

Lots of people are talking about what happens when the flood of easy money into emerging markets thanks to low interest rates in advanced economies like the United States slows even more than it has in the past year.

At a seminar on fiscal policy the discussion focused on the challenges facing policymakers as central banks slowly exit from unconventional monetary policy and interest rates begin rising.

A live poll of the audience found 63 percent said the global economy remains weak and unconventional monetary policies should remain in place.

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Arab Economic Transformation Amid Political Transitions


Masood Ahmed #2By Masood Ahmed

(version in عربي)

The International Monetary Fund released today a new paper entitled “Toward New Horizons—Arab Economic Transformation amid Political Transitions.”

The paper makes the case for the urgency of launching economic policy reforms, beyond short-term macroeconomic management, to support economic stability and stronger, job-creating economic growth in the Arab Countries in Transition—Egypt, Jordan, Libya, Morocco, Tunisia, and Yemen.

These countries face the risk of stagnation if reforms are delayed further.Economic conditions have deteriorated from transition-related disruptions, regional conflict, an unclear political outlook, eroding competitiveness, and a challenging external economic environment.

As economic realities fall behind peoples’ expectations, there is a risk of increased discontent. This could further complicate the political transitions, impairing governments’ mandates and planning horizons and, consequently, their ability to implement the policies necessary to catalyze the much-needed economic improvements.

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Financial Crises: Taking Stock


Stijn ClaessensBy Stijn Claessens

Those who cannot remember the past are condemned to repeat it.

The world has been littered with many financial crises over the centuries, yet many a time these lessons are ignored, and crises recur.  Indeed, there are many clear lessons on the causes of past crises, the severity of their consequences, and how future crises can be prevented or better managed when they occur.

This applies to the 2007-09 global financial crisis that brought colossal disruptions in asset and credit markets, massive erosions of wealth, and unprecedented numbers of bankruptcies.  Six years after the crisis began, its lingering effects are still visible in advanced and emerging markets alike. It is, therefore, a good time to take stock.

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Finish the Job on Financial Regulation


GFSRBy José Viñals

Brisbane and Basel may be 10,000 miles apart, but when it comes to financial regulation the two cities will be standing cheek by jowl.

At the next summit of the Group of Twenty advanced and emerging economies, to be held in Brisbane in November, political leaders will take the pulse of the global financial regulatory reform agenda, launched five years ago. The explicit goal of the Australian G-20 presidency is to finally complete these essential reforms. As Prime Minister Tony Abbott said today in Davos, “Financial regulation is always a work-in-progress, but these reforms now need to be finalized in ways that promote confidence without eliminating risk.”

I strongly support this extra push to create a safer financial system that can better support the needs of the real economy, and better protect taxpayers. For far too long, critics have been able to portray the G-20 reform agenda as a regulatory supertanker stuck in the shallow waters of technical complexity, financial industry pushback, and diverging national views. This image is increasingly off the mark.

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Mali – At the Dawn of a New Year


MD's Updated HeadshotBy Christine Lagarde

(Version in Français)

My second stop on this trip to Africa, after Kenya, was Mali—a country that is facing an extraordinarily difficult transition: from restoring political stability to securing economic stability—from crisis to recovery.

Having gone through massive turmoil in 2012, Mali is emerging successfully, thanks to the perseverance and fortitude of its people. Parliamentary and presidential elections have been held, and the newly elected government has put forth a new economic program aimed at increasing growth and reducing poverty.

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Cambodia: Moving Beyond The Frontier


MD's Updated HeadshotBy Christine Lagarde

Cambodia is the first leg of my Asia trip. This is a country that has already grown by leaps and bounds, and now stands at the frontier of becoming an emerging market economy in the heart of the most dynamic hub of the global economy.

I could feel this energy and excitement everywhere. Cambodians, especially young Cambodians, have big dreams and substantial societal aspirations. They want dignity and respect, so that they can fulfill their potential, both as individuals and as a nation. They want to embrace the wider world and all that it has to offer. They want good governance and strong institutions, which are essential to underpin economic development, empower people and ensure that prosperity is broadly shared.

I heard these themes consistently—from inspiring women leaders, from dynamic young economists, and from the students at the Royal School of Administration, where I gave a speech on how Cambodia can keep its forward momentum.

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Once And For All—Why Capital Levies Are Not The Answer


Mick Keen By Michael Keen

(Version in EspañolFrançais and  中文)

Holy grail

Last night, when you went to bed, you left $40 on the kitchen table. When you woke up this morning, you found only $30—and a note from the government saying, “Thank you very much, we took $10 as a tax payment.” This is, of course, extremely irritating. To an economist, however, it’s close to an ideal form of taxation, since there is nothing you can now do to reduce, avoid, or evade it—the holy grail of what economists call a non-distorting tax.

(This doesn’t mean that you won’t react in some way. Being worse off, you may now work a bit more, or save a bit less. But any other tax raising $1 would make you even worse off, because it would change relative prices (a tax on your earnings would make working less attractive, for instance), and so take your choices even further from those you would make in the absence of taxation.)

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