EM countries must avoid the ‘c-status’

The International Monetary Fund (IMF) has a very large number of highly-skilled economists in its organization, and it happens surprisingly often that rather sharp views are aired from the head office in Washington D.C. In my opinion, it is one of those organizations worth listening to despite the political agendas that the organization both has and is met with. The latest announcement was published just before Easter, when IMF chief Kristalina Georgieva simply gave a warning that the world should be prepared for a debt crisis in the Emerging Markets (EM) countries — it is quite a remark and it should get at least a few alarm bells to ring.

Before investors start pressing the "sell" button, it is worth to consider the timing of the IMF announcement. It was, of course, to set the stage ahead of the "IMF spring meeting" that took place just after Easter (this time virtually, like so much else). The IMF had a very clear-cut plan that something must be achieved at the spring meeting, and clearly on behalf of EM countries. I think it was rightfully so, and the challenge must be addressed by the top IMF level in order to have the right weight when communicating the concerns on behalf of Emerging Market countries. One suggestion as a solution is to introduce a temporary extra tax on companies that have been particularly successful during the crisis. The response from the United States is the idea about a minimum corporate tax globally.