Draft Letter for US Treasury Department
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Dear Secretary Henry M. Paulson:
I am writing to request a meeting with the U.S. Treasury Department’s Office of International Affairs about the International Monetary Fund loan programs routinely approved by the IMF Executive Board for developing countries. Specifically at issue is the question of appropriate inflation-reduction and deficit-reduction targets for low-income countries, and the degree to which current targets in IMF programs may be unnecessarily constraining the levels of public expenditure generally, and for health, education and HIV/AIDS in particular.
A recent study that examined at the impact of IMF policies on health spending in low-income countries by the Washington-based Center for Global Development found evidence which suggests that “IMF-supported fiscal programs have often been too conservative or risk-averse. In particular, the IMF has not done enough to explore more expansionary, but still feasible, options for higher public spending.” On monetary policy, the report noted, “Empirical evidence does not justify pushing inflation to these levels in low-income countries.”
Another recent study of inflation-reduction policies by the University of Massachusetts, Amherst, found, “There is no justification for inflation-targeting policies as they are currently being practiced throughout the middle- and low-income countries.” Most recently, the House Financial Services Committee in a November 1, 2007 letter to the IMF, said: “We are concerned by the IMF’s adherence to overly-rigid macroeconomic targets” in low-income countries, and, “It is particularly troubling to us that the IMF’s policy positions do not reflect any consensus view among economists on appropriate inflation targets.”
I would like to meet with the U.S. Treasury Department’s Office of International Affairs to further discuss this problem and to explore what steps the U.S. Treasury plans to take to implore the IMF to work with other governments to change its policies.
Sincerely, Your Name
