The International Monetary Fund

The International Monetary Fund

Distinguishing Reality from Rhetoric

Graham Bird and Dane Rowlands

There is no shortage of opinion about the International Monetary Fund (IMF). Some see it as the agent of austerity, being manipulated by wealthy nations and forcing poorer countries to pursue economic policies that suppress growth and development. A sharply contrasting view regards it as bailing out such countries with large amounts of soft finance, allowing them to avoid necessary adjustment. The challenge is to evaluate the alternative arguments and to distinguish reality from rhetoric. In this book, the authors undertake a careful and detailed empirical analysis of the underlying issues, covering participation in IMF programs, their implementation and effects on economic growth, and on the willingness of international capital markets to lend.

Chapter 3: The IMF’s lending facilities

Graham Bird and Dane Rowlands

Subjects: economics and finance, financial economics and regulation, international economics, politics and public policy, international relations


Increasing attention is being paid to IMF governance and operations, but not to how IMF programs are differentiated under the array of available lending windows. This chapter examines empirically the economic and political circumstances associated with the use of IMF facilities. It therefore extends existing research into the determinants of IMF arrangements by investigating the extent to which different influences are at work in the case of different facilities. Focusing initially on extended arrangements as compared with stand-bys, the results indicate that although initially the facilities were used in different economic circumstances, since the mid-1980s these differences have largely disappeared. Instead the differences between user countries have become more political than economic. There are, however, some differences between concessionary and non-concessionary facilities beyond the income levels of countries using them. The policy implications for the range and design of the Fund’s lending windows are discussed.

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