EPS Trustee Stiglitz calls for the IMF to suspend or eliminate its surcharge policy

In numerous publications and media outlets, EPS Trustee Joseph Stiglitz calls for the IMF to eliminate its surcharge policy. Surcharges are fees imposed on countries when they can least afford them, making it harder for them to emerge from debt distress. Stiglitz and other economists argue that these fees are harmful to the countries they are intended to help, and that they are not justified from an economic or legal perspective. 

A new journal article by Joseph E. Stiglitz and Kevin P. Gallagher in the Review of Keynesian Economics explores the consequences of the IMF’s surcharges and issues an urgent call for reform.

Stiglitz and Gallagher explain that IMF surcharges are pro-cyclical financial penalties imposed on countries precisely at a time when they can least afford them. What is more, the surcharges were found to worsen potential outcomes for both the borrowing country and its investors, with gains accruing to the IMF at the expense of both. The authors note that this transfer of resources to the IMF has profound consequences for the borrowing country, as it affects not just the level of poverty, health, education and overall well-being in the country in crisis, but also its potential growth.

Read more about Stiglitz’ perspective in the following articles:

IMF surcharges saga could threaten its credibility (Financial Times)

Understanding the Consequences of IMF Surcharges: The Need for Reform (BU)

IMF Surcharge Fees Hurt Those It Is Meant to Help (DC Journal)

(Original article published in the Financial Times on October 9th 2023. Available at: https://www.ft.com/content/163db4c6-303d-4a52-9275-66359e4515e2)