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 9: Conclusions

Graham Bird and Dane Rowlands

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


Casual reference to the IMF’s Annual Report provides information about the status of IMF lending and the countries that have IMF programs. Apart from the Fund’s systemic role, a role that we have not discussed in any detail in this book, the pattern of IMF lending raises a number of questions that are important in any debate about the operations of the Fund, the way it works and the scope for and direction of future reform. It is these questions that we have sought to address. Many commentators have firmly held views about the IMF. These views often contrast sharply. At one end of the spectrum there have been suggestions that the Fund should be closed down or at least that it should curtail much of its lending and severely restrict its operations. At the other end, there are proposals to expand the IMF into a more fully fledged international lender of last resort, with substantially greater lending capacity. Similarly there have been ongoing debates about the design and effects of IMF programs. Critics have argued that the Fund is a purveyor of austerity programs that have seriously adverse effects on economic growth and development.

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