The International Monetary Fund may be one of the United States’ greatest post-war success stories, but as the world’s finance ministers, central bankers and investors arrive in Washington this week for the IMF Spring Meetings, an otherwise generally optimistic global economic picture is tempered not simply by heightened geopolitical risk and uncertainty, but also great concern about whether the new U.S. administration will continue to support the IMF.
Just this past weekend, U.S. Commerce Secretary Wilbur Ross characterized as “rubbish” IMF Managing Director Christine Lagarde’s warnings — alongside those of the World Bank and Organization for Economic Co-operation and Development (OECD) — that while prospects for global economic recovery had brightened, a “sword of protectionism” and political uncertainty posed downside risks. Even before last year’s U.S. election, the IMF had warned of the economic consequences of rising populist anti-trade sentiment around the world. Were Lagarde to have ignored current trade and political uncertainties it could have undermined the IMF’s integrity.
While there has been no official contemplation of reducing U.S. support for the IMF, President Donald Trump’s “skinny budget” proposed sharp reductions in support for United Nations and affiliated agencies, the World Bank, and other multilateral development banks (MDBs). Adding to the unease, the president’s nominees for the two top international positions at the Treasury Department have both expressed skepticism for support of the IMF in the past.