There is much celebration over the so-called burial of austerity by the IMF. This is an exaggeration.…
Before the turn to austerity in 2010, in 2008-2009 the international financial institutions were just as keen as they were last week to exhort countries to use public spending (and to a lesser extent tax cuts) to overcome recessions, using language that was not any less decisive
Here is IMF in late 2008: "for “timely, large, lasting, diversified, and sustainable fiscal stimulus that is coordinated across countries with a commitment to do more if the crisis deepens.”
If the Great Recession is any guide, calls to fiscal stimulus tend to last only as long as the principals of these institutions are facing severe recessions.
Just like in 2008-2009, the current calls for stimulus countries are not addressed to all countries, but only to those countries that have good access to financial markets; for the rest, relatively conventional austerity programs funded by the IMF await
Far from “getting to dare” in practice, the IMF laid bare its intellectual continuity when its staff reports on 80 countries demanded austerity in 2021 already.
As recent research from Boston University shows, since Covid struck “the IMF has made relatively trivial amounts of new financing available and have been slow to disburse the financing at their disposal” financing just over 100 programmes at upwards of USD 88 billion.
This is a puny amount compared to the 2.5 trillion financing needs estimated to avoid economic collapse in emerging market and developing countries.
Yet we may take heart that it was in only 13 of the program that IMF lending came with strings attached and recipient countries and the Fund encouraged program countries to spend more on health and welfare to deal with the disease and protect the socially vulnerable.
Change may be in the wings but we may be advised not to hold our breath for a paradigm change.
In short, let's not confuse some change for a paradigm shift. For those without "fiscal space", we will have a version of austerity that's a bit more humane, greener and a bit less procyclical. But it will still be austerity.
It's austerity with adjectives, then, not a burial of austerity.…

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