The official comuniqué that concluded the G20 summit in Cannes clearly shows that the IMF remains today the only international institution capable of addressing the global crisis. In fact, the traditional views of the Fund are fully reflected in the document. In particular:
- the principle that fiscal consolidation should not take place everywhere, threatening to tighten the global economy into a slump in the demand: countries with sound fiscal positions (eg Germany) should leave automatic stabilizers to operate and support demand with discretionary measures (which translated from Fundlish means that these countries should accept a worsening of fiscal balances).
- The same applies to countries running with current account surpluses (Germany): they should commit to reforms that support domestic demand
These are two important points: deficit countries (fiscal and current account) must reduce demand and to promote structural reforms that increase competitiveness, but those in surpluse need to support demand and let the real exchange rate appreciate.