Financial leaders of the emerging markets are trying to remind new International Monetary Fund (IMF) head Cristine Lagarde and the others within the IMF of promises not kept, particularly an increasing fixation on the European Union and little else.
In the last several months the most vocal critic of the IMF and of the central banks has been the Brazilian Finance Minister Guido Mantega, who had previously called out the U.S. Federal Reserve as well as some in the European Union for causing what he considered a currency war designed to hurt emerging nations’ trade performance. The latest objections launched at the IMF now are centered on the preoccupation with Europe. Mantega forcefully articulated that every IMF meeting essentially is focused on Europe, and there is almost no attention paid to the rest of the world. It is something Lagarde promised would not happen in the run-up to Lagarde’s ascension.
That problem is made even more pressing by the widely held assertion that what is deemed good for the Europeans is generally bad for the rest of the world. The policies of the IMF have all been about growth in the euro zone, and that means putting the euro ahead of every other currency and potentially pursuing exports/trying to block imports to some degree. The overall sense is that Europe counts for far more than the emerging economies. This is not an uncommon assertion, and it is one the IMF has been dogged by for decades. The problem now is that these emerging nations are more influential than they have been in the past, and their patience has run thin. They want to be taken seriously and now have the economic clout to get what they want.
-Chris Kuehl, PhD., NACM economist