An internal International Monetary Fund review of its actions during the financial crisis released today has criticised its push for fiscal austerity in troubled countries, dubbing it premature.
The IMF's Independent Evaluation Office also said the Fund was wrong to push central banks to flood money into economies to stimulate a rebound in growth after the 2008 crisis.
"The IMF was effective in calling for global fiscal stimulus immediately following the Lehman collapse," the IEO said in the lengthy report.
"But it prematurely endorsed fiscal consolidation in large advanced economies, and, in parallel, encouraged reliance on expansionary monetary policy to stimulate demand.
"This policy mix was less than fully effective in promoting recovery and contributed to capital flow volatility in emerging markets."
The report acknowledged that the Fund, under criticism especially in Europe for its 2010-11 push for government austerity policies, subsequently switched gears when the euro zone economy, as well as the United States, continued to struggle.
The push for government spending cuts in some of the largest advanced economies, the IEO said, came too early "as economic recovery was not yet firmly established."
"At the same time, the evaluation recognizes that the IMF showed flexibility in reconsidering its fiscal policy advice when the growth outlook worsened."