Saturday, April 11, 2009

Happy Easter from the IMF

Despite the recession, businesses and governments continue to lay the foundation for a Greener world. Easter is but the latest cultural fixture to go Green. With billions being spent, Easter is huge for chocolate manufacturers and retailers. The chocolate industry is getting serious about reducing packaging and the White Houses' 2009 souvenir egg, is the "Greenest" egg in history.

According to a UK article, the chocolate industry creates 4,500 tons of packaging every year, but manufacturers of Easter confections are getting serious about reducing packaging. "Nestle is removing plastic from 20 million of its products. It says the changes will bring a 30 per cent reduction in the weight of packaging, cutting some 700 tons of waste - equivalent to 100 double-decker buses....Also out are the plastic bags that hold the sweets that sit inside the eggs. As well as cutting waste, the move will reduce transport costs and emissions because each [truck] consignment can carry more of the smaller boxes - saving some 48,000 road miles."

Perhaps the greatest gift this Easter comes from an unlikely source. The IMF, often derided for its tendency to favor developed nations by attaching strings to the credit it provides, is now being cast as a savior for the collapsing world economy. As reported in Time, since September 2008, the IMF has provided rescue packages totaling more than $50 billion for Hungary, Iceland, Latvia, Ukraine and other financially struggling countries.

On April 2, G-20 leaders in London agreed to "triple the IMF's resources to $750 billion, and to allow it to issue a further $250 billion on its own. Part of that money is supposed to go to countries suddenly in financial straits, and part is designed to serve as a more general liquidity boost to the contracting world economy."

Money is not the only offering from the IMF, important changes in the way the IMF functions have been proposed. According to these proposals Europe and the US will share power with emerging economies such as Brazil, China and Russia. Further, the IMF will play a more active role supporting and enforcing regulation.

This would reflect a return to the IMF as it was outlined by John Maynard Keynes in the 1940's. The IMF "is not a Red Cross philanthropic relief scheme, by which the rich countries come to the rescue of the poor," Keynes declared. Rather, it should be a "highly necessary mechanism, which is at least as useful to the creditor as to the debtor."

If the G20 declarations are put into practice, this will represent a profound shift in international monetary policy with the IMF playing a pivotal role. And the current recession makes it difficult to overstate the importance of stabilizing the world economy.

The proposed changes to the IMF are an important step on the road to sustainablity because global stability and international cooperation are crucial to the world wide proliferation of Green.

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