More on the "New IMF"

More evidence for the changes in our NIMF (New International Monetary Fund). In the executive summary to the last WEO, it argues that:

"Fiscal adjustment has already started, and progress has been significant in many economies. Strengthening medium-term fiscal plans and implementing entitlement reforms are critical to ensuring credibility and fiscal sustainability and to creating policy room to support balance sheet repair, growth, and job creation."

That is, not only they want continuing fiscal adjustment, but also cuts to entitlement programs like pensions (in IMF-speak its entitlement reform; one more for the English-IMF/IMF-English dictionary). Because fiscal consolidation (they mean austerity, cutting spending and increasing taxes) will lead to growth and job creation. Sounds new, doesn't it?

So does the IMF think that the periphery of Europe should not continue to tighten fiscal policy? Here is what they have to say:

"In the economies of the periphery [of Europe], a major task will be to find the right balance between fiscal consolidation and structural reform on the one hand and external support on the other, so as to ensure that adjustment in these economies can be sustained."

So external support yes, and of course continue with the adjustment. And yes in IMF-speak structural adjustment means cuts in social programs, or entitlement reform. Again nothing like the fresh new approach at the Fund.

And in Latin America? Well no worries they also have a new approach. For them:

"Some emerging market economies are contributing more domestic demand than is desirable (for example, several economies in Latin America); ... [Latin America] needs to restrain strong domestic demand by considerably reducing structural fiscal deficits and, in some cases, by further removing monetary accommodation."

Yes, more contractionary fiscal and monetary policies. The NIMF is full of 'new' ideas! Uhm, that nice smell of new policy measures!