The G20, IMF and Global Imbalances: The Policymakers’ Perspective

  • Michael Callaghan


In the lead-up to the Cannes G20 Summit in 2011, Barry Eichengreen observed: ‘the G20 is unlikely to protect us from the risks posed by disorderly unwinding of imbalances’. In the Brookings/Centre for Global Innovation and Governance joint project, taking soundings of media coverage after G20 Leaders’ Summits, the conclusion from the Los Cabos Summit in June 2012 was, ‘at Los Cabos, the long-term issue of global rebalancing did not seem to receive priority attention.

This is not surprising, notwithstanding that global imbalances are purportedly a key issue for the G20. Examining the causes and consequences of global imbalances has been fertile ground for economists and academics. However, this debate has largely failed to capture the attention of the policymakers. This is not because external imbalances are of no concern under any circumstance, or because there is no plausible case for a policy response. Rather, it is because it is difficult for the policymaker to win the domestic political debate needed to implement often contentious policy changes and reforms by saying that the measures will lead to a ‘reduction in global imbalances’.

In order to get economic measures accepted, the policymaker will approach the issue from a domestic viewpoint, in particular the impact on achieving economic and jobs growth. For the International Monetary Fund (IMF) to have more traction in convincing countries to implement policies required to lower current account imbalances and related vulnerabilities, they need to focus more on how such measures will benefit the domestic interest of the countries concerned.


Gross Domestic Product International Monetary Fund Current Account Current Account Deficit Fiscal Consolidation 
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Copyright information

© Springer India 2014

Authors and Affiliations

  1. 1.G20 Studies CentreLowy Institute for International PolicySydneyAustralia

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