Daily Management Review

Start Of IMF, World Bank Meetings Clouded By Worries Over Trump Policies


Start Of IMF, World Bank Meetings Clouded By Worries Over Trump Policies
In order to try and nudge his still-evolving policies away from protectionism and show broad support for open trade and global integration, world finance leaders are gathering on U.S. President Donald Trump's home turf in a meeting.
Barely just two blocks from the White House, the two multilateral institutions' 189 members face-to-face with Trump's "America First" agenda for the first time, as the International Monetary Fund and World Bank and its their delegated gather for their spring meetings.
"These meetings will all be about Trump and the implications of his policies for the international agenda," said Domenico Lombardi, a former IMF board official who is now with the Centre for International Governance Innovation, a Canadian think-tank.
And aiming to "socialize" the new administration to the IMF's agenda and influence its policy choices is IMF Managing Director Christine Lagarde, he added.
Arguing in its latest economic forecasts that protectionist policies would crimp global growth that is starting to gain traction, it has been the IMF in particular which has sounded warnings against Trump's plans to shrink U.S. trade deficits with potential measures to restrict imports.
But by arguing that other countries are more protectionist than the United States, Trump administration officials are now pushing back against such warnings.
Lashing out at Canadian dairy restrictions and the signing an executive order to review "Buy American" public procurement rules that have long offered some exemptions under free trade agreements was how Trump launched the week.
two studies pointing out dangers from fiscal proposals that Trump is considering were unveiled by the IMF on Wednesday in addition to warnings on trade. Warnings that Trump’s tax reform ideas could raise public debt enough to hurt growth and could fuel financial risk-taking were included in these studies.
IMF fiscal affairs director Vitor Gaspar added that making tax reforms "in a way that does not increase the deficit is better for growth" was the way to move ahead.
Eswar Prasad, former head of the IMF's China department said that insistence that an anti-protectionism pledge be dropped from a Group of 20 communique issued in Baden-Baden, Germany, by U.S. Treasury Secretary Steven Mnuchin last month, was especially the reason that this most recent advice may simply be ignored by the White House.
"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," said Prasad, now an international trade professor at Cornell University.
However, one concern for the IMF ahead of the meeting was removed after Mnuchin's decision against naming China a currency manipulator.
The IMF would work for "free and fair" trade and would listen to all of its members, Lagarde also noted on Wednesday. Lagarde is set to interview Mnuchin on stage during the meeting

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