Gallagher Co-Authors Policy Brief on Consequences of IMF Surcharges
Kevin Gallagher, Professor of Global Development Policy at the Frederick S. Pardee School of Global Studies at Boston University and Director of BU’s Global Development Policy Center (GDP Center), co-authored a policy brief exploring the consequences of the International Monetary Fund’s (IMF) surcharges and issues an urgent call for reform.
The brief, titled “Understanding the Consequences of IMF Surcharges,” is co-authored by Gallagher and Nobel Prize-winning economist Joseph E. Stiglitz and is jointly published with the Initiative for Policy Dialogue at Columbia University.
Their policy brief examines the economic implications of the surcharges from a global distributive perspective. Noting that, “of course, it is important for member countries not to become over-reliant on the IMF for liquidity,” the authors explain that, “regressive and pro-cyclical surcharges are not the most efficient way to create such incentives amid a global economic crisis.” Gallagher and Stiglitz also stress that many countries are currently experiencing increased levels of debt beyond what they normally would have undertaken, given the fiscal needs of responding to the COVID-19 crisis.
In discussing the brief and its findings, Gallagher said, “Our policy brief provides a framework for understanding the unintended consequences of the IMF’s surcharge policy. At this juncture, the surcharges are pro-cyclical and regressive, making host countries and potentially creditors worse off at exactly the time when countries need every cent of hard currency to gain the space to attack the coronavirus and mount a sustainable recovery. The IMF should suspend these surcharges immediately to give member states this breathing space, and to give the IMF the incentive to rethink its business model.”
The full policy brief can be read on the GDP Center’s website.
Kevin Gallagher is a professor of global development policy at Boston University’s Frederick S. Pardee School of Global Studies, where he directs the Global Development Policy Center. He is the author or co-author of six books, including most recently, The China Triangle: Latin America’s China Boom and the Fate of the Washington Consensus. Read more about Professor Gallagher on his Pardee School faculty profile.