Burden-Shifting and Tightened Conditionality, 1975–76: ‘The Practice of Financing the Status Quo is Coming to an End’

Abstract

As discussed in Chapter 4, there were indicators in 1975 suggesting growing differences of view among international financial officials over the appropriate mechanisms to address persisting current account deficits. In his remarks at the 1975 annual IMF meeting, IMF Managing Director Johannes Witteveen (1975b: 249) acknowledged that disagreements ‘have naturally reflected differences among countries in economic priorities or objectives and in the assessment of evolving trends and prospects,’ but he nonetheless hoped that the assembled officials would come to ‘general agreement on two propositions. First countries must avoid policies that would achieve national objectives by shifting the burden to their trading partners. Second, given the strong interdependence of national economies, countries have international, as well as national, responsibilities.’

US Treasury Secretary William Simon (1976b) in a confidential spring 1976 memo.