| WASHINGTON, March 13
WASHINGTON, March 13 Raising the retirement age
and scrapping regressive taxes such as deducting the interest on
mortgages can help richer governments address income inequality
without straining their pocketbooks, IMF staff said in a paper
In recent months, the International Monetary Fund has taken
an increasingly vocal stance on the widening gaps between rich
and poor nations. IMF staff say they have focused more on
inequality due to interest from the Fund's 188 member countries.
From Asia to the United States, the richest one percent of
earners have taken home a growing share of the economic pie,
leading to pressure on policymakers to do something about it.
In a wide-ranging paper, IMF officials offer cash-strapped
governments a menu of options on how to customize their social
protection programs to get the biggest bang for their buck.
"The key message that I want to convey today is that when it
comes to fiscal redistribution, design matters," David Lipton,
the IMF's first deputy managing director, said in a speech. He
presented the paper at the Peterson Institute for International
Economics in Washington.
Richer countries with aging populations may consider raising
the retirement age to preserve pensions while saving money, the
IMF staff said.
Developing economies could focus on better targeting social
programs and raising property taxes, among other policies, the
economists said. For other advice, see the paper:
Lipton noted that in most developing countries, the poorest
40 percent of the population ends up receiving less than 20
percent of the benefits from social spending.
The IMF analyzes the economies of each of its 188 member
countries and offers advice on government budget and monetary
policies. Lipton said the IMF has always assessed the impact of
countries' tax and spending policies on "distributional goals."
"There are many cases where we will express our view if we
think that policies are likely to undermine growth ... by having
adverse consequences upon the poor," Lipton told reporters.
IMF economists also point out that 50 percent of IMF
programs include a requirement that authorities not reduce
social spending below a certain level.
But the Fund had not traditionally focused on income
inequality until recent years. IMF Managing Director Christine
Lagarde sounded the trumpet on rising income disparities in two
major speeches last month.
And another IMF study two weeks ago said income inequality
can lead to slower or less sustainable economic growth, while
redistribution can actually help an economy.
"We hope this signals a long term change in IMF policy
advice to countries - to invest in health and education and more
progressive fiscal policies," said Nicolas Mombrial, a spokesman
for the development advocacy group Oxfam.