May 11, 2017
Germany rejects IMF’s policy recommendations before they are issued
Life must be very frustrating for the IMF’s Germany team, who are currently in Berlin for consultations about the forthcoming Art IV consultations. Whatever they recommend, it is certain to be rejected. Schäuble’s ministry has now gone over to a new tactic: they are not only rejecting the recommendations, but they are doing so pre-emptively, even before they have been issued. German news media had reported that the IMF would demand a shift in taxation towards wealth, especially property taxes, which cannot be avoided through relocation. A spokeswoman for Schäuble pointed out yesterday that Germany was redistributing more income than any large industrial nation in the world. In Europe only Belgium and Austria redistribute more. As reported by FAZ this morning, the IMF is also demanding higher wage increases in Germany, to encourage further growth and to reduce the current account surplus. The IMF also wants the German government to raise investment spending. There are no prizes for guessing what the German response to such suggestions will be.