Banking on the fund

The IMF is getting more resources to support the world economy. If it is to succeed, it needs more reformIT IS easy to be cynical about the recent G20 summit in London. There was lots of hoopla, but there were no new, substantial remedies for the global slump, whether in the form of co-ordinated stimulus or comprehensive plans to clean up banks. So the worlds leaders diverted attention with an old formula: bandying around big but squishy numbers and blathering about the importance of international institutions. Even by the standards of global summitry, the G20 communique was pretty brazen. It crowed about a concerted fiscal expansion of $5 trillion by the end of 2010, as well as $1.1 trillion in additional resources through international institutions like the IMF. The $5 trillion figure seems to be an estimate of how much public finances could deteriorate by the end of 2010not exactly the same as a planned fiscal boost. And the $1.1 trillion is even slipperier. Not only is $1.1 trillion of financing for international bodies not the same as $1.1 trillion of extra spending, the sum itself is inflated. As for the $250 billion of support for trade finance that the politicians said they would ensure, it is unclear where this will come from (see article). The amount of additional public money promised in London was a small fraction of that.