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DPA
Washington
The International Monetary Fund is sounding the alarm about two key threats to global prosperity: protectionism and excessive debt.
The veiled target for both is Donald Trump.
The US president has scuttled trade deals, slapped tariffs on imported metals and provoked a spiralling trade conflict with China.
Since December, he has signed major tax and spending measures putting the United States on a path of trillion-dollar annual deficits for years to come.
But does the IMF see anything that the right-wing populist has done right during his first 15 months in office?
December's tax legislation included not just budget-busting cuts in the personal income tax, with significant benefits going to high earners, but slashed the corporate income tax rate from 35 per cent ” among the highest in any advanced economy ” to 21 per cent, in line with the 22-per-cent average among Organization for Economic Cooperation and Development countries.
"This is a reform that we have advocated, recommended, encouraged, and that we are very pleased to see happening,"IMF chief Christine Lagarde said Thursday in Washington ahead of this week's spring meetings at IMF~headquarters, four blocks from Trump's White House.
The legislation removed tax disincentives for US companies to repatriate foreign earnings. Since December, US multinationals have started bringing home much of the estimated 2.6 trillion dollars in foreign profits kept stashed abroad, delivering a surge of domestic investment capital and temporarily bolstering federal tax revenues.
Trump called the tax measure"rocket fuel"for the US economy.
Lagarde praised aspects of the reform that simplified corporate income taxes.
But she used the opportunity to repeat the IMF's exhortation for the US to"take advantage"of temporarily stronger economic growth to"try to reduce its deficit and should try to move its debt downward rather than upward."
The IMF Fiscal Monitor report this week forecast that US federal debt as a proportion of gross domestic product would swell from 107.8 per cent last year to 116.9 per cent in 2023, even as public sector debt is projected to fall in nearly all other advanced economies.
