Drumming up business

28 January 2008 By Martin Hutchinson

StraussKahn’s call for greater fiscal deficits contradicts traditional, fiscally conservative IMF policy. However the IMF currently has run out of borrowers and is barely breaking even. Maybe StraussKahn is looking for more fiscal wrecks for the IMF body shop.

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Dominique StraussKahn, managing director of the International Monetary Fund, called January 27 for a new and more stimulative fiscal policy, effectively backing the US fiscal stimulus package. The IMF had previously been calling for fiscal restraint in the US and Japan.

StraussKahn's call gained approval at the Davos world economic forum from Christine Lagarde, the French finance minister and Palaniappan Chidambaram, the Indian finance minister, who said India might have some room for further fiscal stimulus. Indian public expenditure in the 8 months to November 2007 was up 22.2% from the previous year.

At October 31 the IMF had $6.7bn of credits outstanding and $6.6bn of investments; its net income in the 6 months to October 31 was $23.6m, a 0.21% return on its $222bn of capital (including quota contributions).

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