Monday, 23 November 2009

IMF chief warns on exit strategy

Michael Burke: Report in the Financial Times, Monday November 23:

"'Economic stimulus programmes, including those in the UK, should not be withdrawn too soon, Dominique Strauss-Kahn, managing director of the International Monetary Fund, warned on Monday.

He stepped into the intense debate about how quickly to tackle the UK’s £175bn budget deficit by telling the CBI employers group that “this kind of support will have to last some time more until we are sure the recovery is firmly established."

“It is too early for a general exit. We recommend erring on the side of caution, as exiting too early is costlier than exiting too late,” he said.'

He had nothing to say, though, about an economy which had not engaged in any reflation at all, but had only enacted a sharp fiscal contraction.


Fergus O'Rourke said...

And why do you think that he had nothing to say about it, Michael ? Could it possibly be that he understands that there is a difference between the two situations ?

Michael Burke said...

@ Fergus O'Rourke

I'm sure he understands the difference between reflation and contraction; but he was addressing the broad sweep of policy in the advanced economies, not a unique case of economic suicide.

Fergus O'Rourke said...

I do, of course, accept that both the IMF and the Irish government can be incorrect simultaneously, and for different reasons, even.However, the implication of this post is that they are at loggerheads, and that the IMF would prefer if Ireland had a UK-style stimulus programme.

Perhaps I missed it, but I was not aware that that was the IMF's view, or indeed that its view of current Irish government economic policy was negative at all.