By Simon Nixon, Wall Street Journal

I’ve written before about the International Monetary Fund’s dreadful forecasting record and the flawed policy advice that flows from it. Managing Director Christine Lagarde has already apologized to the U.K. for its ludicrous warning that the government was playing with fire in persisting with its fiscal-consolidation plans in 2013—just as the economy embarked on a robust recovery. 

Sadly, the IMF has declined to take up my suggestion that it should apologize to Greece for its attempts to bully the country into further austerity measures at the end of last year to fill a budget gap that wasn’t there.

Now here’s the IMF’s latest Article IV consultation on Spain, published Thursday, which is positively gushing about the recovery that has now firmly taken hold: “Spain has turned the corner. Growth has resumed, labor market trends are improving, the current account is in surplus, banks are healthier, and sovereign yields are at record lows.” Growth, it says, will be 1.2% this year. Yet only a year ago it was forecasting growth this year of 0%, only hitting 1.2% by 2018 when unemployment was still expected to be above 25%. How wrong can you be?

Of course, forecasting is difficult and lots of people failed to spot the Spanish recovery coming. When I wrote this time last year that Spain was likely to be growing by 2% on an annualized basis by the end of this year, I was told I was “economically illiterate.” But what is alarming about the IMF’s forecast errors is that they’ve been used to push a highly controversial policy agenda, which it turns out may have been the wrong medicine. For example, last year’s gloomy assessment on Spain was accompanied by calls for looser fiscal and monetary policy.

Indeed, the IMF, which in the past had always been seen as the high priest of austerity, these days looks increasingly like a global cheerleader for old-fashioned Keynesian demand-side stimulus—a kind of New Washington consensus. At a recent dinner in Brussels, I was struck by the depth of anger still felt by a number of very senior European political leaders over the immense damage inflicted on some smaller euro-zone economies as a result of their participation in an IMF-driven global fiscal stimulus in 2009, spending money that was ultimately wasted and adding to deficits and debt burdens that have been hard to unwind.

Even today, despite the recovery and its own forecasting failures, the IMF continues to push the case for further fiscal and monetary stimulus—music to the ears of the leftist governments in France and Italy but frustrating to those many euro-zone policy makers who believe that the biggest obstacle to stronger euro-zone growth is lack of progress on structural reforms above all in France and Italy. Meanwhile there is indignation at the European Central Bank over what some perceive to be IMF scare-mongering over euro-zone deflation risks and its persistent calls for the ECB to embark on a government bond-buying program, which underestimate the political hurdles or the very real doubts over what it would actually achieve.

Sure, there is still great respect across Europe for the IMF’s core business of designing and monitoring assistance programs and the technical skills and experience that it has brought to the euro zone’s rescue packages. In German policy circles in particular, the IMF’s involvement in bailout programs continues to be seen as indispensable, reflecting the credibility that comes from its independence from European political pressures.

Instead, the problem lies in its macroeconomic surveillance work, where the IMF has acquired greater power and influence as a result of the crisis. These issues are inherently highly political—and it does the IMF no credit that it seems to keep coming down on the wrong side of the argument.