G7 calls for budget cut at the IMF

News|Bretton Woods Project|4 December 2007|update 58|url
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Echoing calls that have been made by civil society (see Update 51), the major shareholders of the Fund are now calling for the IMF to severely curtail its expenses. US Treasury secretary Hank Paulson welcomed the Crockett committee’s work on the Fund income model (see Update 55) but said, “an equally important part of the solution must be to seriously reduce spending by re-aligning staff and expenditures to focus on the IMF’s core mission. … Alongside a concrete work plan for consolidation, we will work on longer-term sources of income for the IMF.” The G7 communiqué from October also called for “a serious review of its activities and consolidation of its spending.” It seems unlikely that the G7 and the US Treasury will be satisfied with “an administrative budget that declines in real terms”, but not nominal ones, as proposed by then-managing director Rodrigo de Rato. Rato touted the three-year budget as a 6 per cent decline in real terms, though it envisions expenditure increasing from $974 million in the fiscal year ending April 2007 to $1,010 million in 2010. If the US makes good on its threat to refuse to discuss new income sources without a retrenchment, new IMF managing director Strauss-Kahn will have little choice but to concede.

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Published: 4 December 2007 , last edited: 4 December 2007

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