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Response to Article: “The IMF is Showing Some Hypocrisy on Inequality”

Your article claims that we do not “walk-the-talk” on inequality. This is incorrect. It is true that, over the last six years or so, IMF staff have carried out an increasing amount of research on issues related to inequality and inclusive growth. Researchers have discovered, for instance, that:

But inclusion is more than a research agenda for the IMF—it also falls under our mandate to promote domestic and global economic stability. So we are making a concerted effort to pay more attention to these issues in the course of our practical work with member countries.

A good example of this is our increased emphasis on supporting the vulnerable in our programs with low-income country members:

More broadly, in our capacity building efforts with members including—but not limited to—low-income countries, our fiscal technical assistance has focused on the distributive aspects of policies. In particular, our policy advice on energy subsidy reform normally includes an assessment of distributional effects and mitigating measures to protect the poor.

In an effort to further operationalize and mainstream issues such as income inequality, financial inclusion, gender and climate change in the Fund’s annual “health-check” of country economies (Article IV surveillance), we took the initiative in 2015 to work with a number of our member countries on a series of pilot cases.

On inequality, for instance, our first wave of pilots has now been completed and covered 10 countries: Bolivia, Colombia, Denmark, Ethiopia, Israel, Korea, Kyrgyz Republic, Malawi, Mauritania, and Republic of Congo. These pilot cases were on top of the analysis already underway in our regular country work—we have, for example, also looked at income polarization in countries including the United States , and highlighted how it can, among other things, lessen social mobility and add to economic insecurity.

On another essential aspect of inequality—gender—we have carried out 13 country pilots: Chile, Costa Rica, Guatemala, Germany, Hungary, India, Italy, Jordan, Mali, Mauritius, Nigeria, Pakistan, and Sweden. Again, these have complemented our existing advice to many other countries on raising female labor force participation—in Japan and Korea , for instance, among other measures, we have also been calling for higher wages including for women and non-regular workers, in addition to other steps to reduce labor market duality.

To build on the progress of these pilots—as well as others focusing on climate change/energy, infrastructure, international taxation, and revenue administration—we are now in the process of conducting another round in 2016/17. This second wave of country studies includes:

By taking this approach, the IMF is, in fact, “walking-the-talk” on the crucial issue of inequality.

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