International Monetary Fund (IMF)


International Monetary Fund, Pubic Domain

International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an international organization whose mandate focuses on financial stability and security as it relates to the international monetary system, as well as providing economic aid and assistance to countries. From January of 2002-July 2013, the International Monetary Fund has been said to have loaned 735 billion dollars and continues to be an active international organization with regards to international loans (Nelson, 2014).

The IMF was initially created out of the Bretton Woods Conference during World War II in 1944. In order to understand the formation of the IMF, it is necessary to look at the historical context that is the Bretton Woods Conference. This article will examine the History of the IMF, the principles and objectives of the organization, the leadership structure, criticisms of the International Monetary Fund, as well as recommendations for additional books and other readings related to the the IMF.

Bretton Woods Conference

It was here at the Bretton Woods Conference that leaders from around the world came together in attempts to organize a new monetary system, one that would mix stability with state flexibility in their economic policies. Concerned about what transpired during the buildup and then through World War II, political leaders from a number of states in the West wanted to ensure that the high instability and varied exchange rates decades earlier would be not be repeated. But given the issues that resulted from the gold-standard in the late 1920s and very early 1930s (such as imbalances, the inability for states to adhere to expectations and requirements of the gold standard system, as well as issues of liquidity, among other issues), leaders were now not willing to revisit a purely gold-standard model (Bordo, 1993). Yet at the same time, others were arguing against what they saw as the flaws of the floating exchange rates (Nurske, 1994, in Bordo, 1993).

Thus, as Michael D. Bordo (1993) explains, “[t]hey sought to avoid the defects of floating rates (destabilizing speculation and competitive beggarthy-neighbor devaluations) and the defects of the fixed exchange rate gold standard (subordination of national monetary policies to the dictates of external balance and subjection of the economy to the international transmission of the business cycle). As a consequence, they set up  an adjustable peg system of fixed parties that could be changed only in the event of a fundamental disequilibrium” (5). They were quite supportive of everything that the gold standard offered, but recognized the effects that shocks to the system could have on states, which could be seen with oscillating demands in gold (Bordo 1981; Rockoff, 1984, in Bordo, 1993). Thus, a “floating exchange rate” offered a protection against such concerns, albeit at the price of potential inflation policies by state leaders (Bordo, 1993). (For a detailed history of the politics of the 1944 Breton Woods Conference, see the book “The Battle of Bretton Woods: John Maynard Keyes, Harry Dexter White, and the Making of the New World Order” by Benn Steil, as well as The Bretton Woods Transcripts, by Kurt Schuler and Andrew Rosenberg).

As Weiss (2014) explains, “From 1946 until 1973, the IMF managed the “par value adjustment peg” system. The U.S. dollar was fixed to gold at $35 per ounce, and all other member countries’ currencies were fixed to the dollar at different rates. The system of fixed rates ended in 1973 when the United States removed itself from the gold standard.” It was in 1971 that United States President Richard Nixon began calling for changes to current US economic policy, which was dubbed the “Nixon shock” (US Department of State Office of the Historian). Much of the reason for the shift in US policy was due to high overvaluation of the dollar because of heavy US deficits as it related to the financial costs of the Vietnam War, as well as the Cold War (Pease, 2012: 194).

Role of the International Monetary Fund (IMF)

The International Monetary Fund currently has 188 states as members. Overall, the IMF has six primary stated objectives, which are listed in the International Monetary Fund Articles of Agreement, and are as follows:

  • promoting international monetary cooperation
  • expanding the balanced growth of international trade
  • facilitating exchange rate stability
  • eliminating restrictions on the international flow of capital
  • ensuring confidence by making the general resources of the Fund temporarily available to members
  • and adjusting balance-of-payments imbalances in an orderly manner (Weiss, 2014).

International Monetary Fund Lending and Bilateral Surveillance

Countries with an interest in securing a loan from the International Monetary Fund will apply for a loan. The IMF will in turn determine need, and then will set the conitions of the loan (Nelson, 2014). Regarding the providing of funding (or the ‘use of fund resources’), countries will work with IMF officials to create what the IMF officials see as an acceptable policy, which will then go for a vote to the Executive Board (Mountford, 2008). Then, as Nelson (2014) explains, “When a borrower agrees to terms and the staff and management have settled on the size of the disbursement, the borrower can access only a fraction of the total amount specified in the loan agreement. Access to additional tranches is contingent on compliance with policy targets, which are spelled out in the Letter of Intent signed by the economic authorities in the borrowing country” (300). These are the conditions that the IMF is well known for.

Nelson (2014) explains the IMF’s position on notions of loan conditionality when he says that:

“Conditionality plays several roles in helping the IMF’s staff and management to carry out the institution’s mandate. The primary goal of binding conditionality is to limit the borrower’s policy discretion to ensure “full and expeditious repayment” of the loan. The IMF views itself as providing a lifeline to countries suffering balance-of-payments problems that are in good part a consequence of unwise policies; giving loans without narrowing the range of policy actions available to the government risks feeding a permanent payments crisis (or, worse, rewarding failed policies).

A second-order goal of conditional lending is to improve overall economic performance. Conditionality is a way to ensure that the borrower follows a consistent, comprehensive reform program, since unfettered governments that institute effective reforms in one area of the economy often let policies deteriorate in another. Conditionality can play a role in catalyzing inflows of private capital, as well, by signaling that the borrower is serious about stabilizing and reforming the economy” (301).

Following the securing of a loan, if the country does not follow the conditions set by the International Monetary Fund, the international organization does have enforcement mechanisms at their disposal. For example, they can stop the payment of the loan unless the country leaders go ahead and follow the conditions. Or, they can at times offer temporary waivers for states (Nelson, 2014). And as we shall see in a later section on criticisms of the IMF, others have interpreted these conditionality’s as a way for the powerful states in the IMF to control capital-poor countries, all the while promoting free-market capitalism.

In addition to these lending aspects of the Articles of Agreement, the IMF also carries out surveillance or what is called “bilateral surveillance” (Mountford, 2008: 16), which includes assessing economic situation of all of its member states. They do this yearly, and argue that is serves an important function for the overall economic stability of the world. As Hurd (2014) explains, “the objective of surveillance is to identify potential macroeconomic tension in countries before it becomes so unstable that it precipitates a national or systematic crisis” (76). The IMF is concerned about this, as they believe that problems in one country could have a domino effect throughout the rest of the respective region and world. However, as we shall see, this has not been without criticism by states thinking that the IMF is asking for too much, and some, such as Argentina, having at times denied the IMF’s information requests (Hurd, 2014: 76).

International Monetary Fund, Public Domain

International Monetary Fund, Public Domain

Organizational Structure of the International Monetary Fund (IMF)

There are three primary decision-making bodies within the International Monetary Fund: The Board of Governors, the Executive Board, and the Managing Director.

IMF Board of Governors

The International Monetary Fund Board of Governors is comprised of all states within the IMF, which is currently at 188 members. They meet every year to discuss matters related to the IMF, whereas Governor committees meet bi-annually (Weiss, 2014). Depending on how big their economy is, as well as their financial contributions to the IMF, every state receives a voting “quota” (how many votes each state has) (Mountford, 2008). Thus, states with larger economies, as well as those that provide larger economic contributions to the IMF have a larger quota. In the case of the United States, their have roughly 17 percent of the total vote weight in the IMF, which is more than any other country (Mountford, 2008). What is also particularly interesting about the role of the United States in terms of the International Monetary Fund is the “veto” power of the US Congress. This stems from the early formation and stipulations of the International Monetary Fund, where

“The U.S. Senate agreed to the ratification (by the President) of the Fund and the Bank Agreements in July 1945. U.S. Participation in both organizations is authorized by the United States Bretton Woods Agreement Act, as amended (Bretton Woods Act). Unique among the founding members, the United States, in the Bretton Woods Act, requires specific congressional authorization to change the U.S. quota or “shares” in the Fund or for the United States to vote to amend the Articles of Agreement of the IMF or the World Bank. The U.S. Congress, thus has veto power over major decisions at both institutions” (Weiss, 2014: 1-2)

At the Board of Governors, each state in the IMF can choose their own representation, or governor. There is also a chairperson, which changes yearly, and is based on a rotating system based on regions (Mountford, 2008). As Mountford (2008) explains

“The Board of Governors is the ultimate political authority in the Fund. The Governors have two types of power: those that are explicitly conferred on them by the Articles of Agreement, and a much larger number that are implied. The explicit powers, which may not be delegated include: acceptance of new members and establishment of their quotas; suspension of membership; general ad hoc increases in the quotas of existing members; and amendment of the Articles of Agreement. The governors have explicit powers to appoint, or nominate and elect the executive directors. They have the power to increase, for the purpose of a regular election, the number of executive directors, and they determine the executive directors’ remuneration and benefits. The Articles also specify the governors’ role in cases where a member appeals against an interpretation of the Articles that is made by the Executive Board” (6).

For these sorts of special decisions to pass through the Board of Governors (and Executive Board), it usually needs either 70 percent or 85 percent approval. Again, states have various voting quotas, and can use all of their votes when casting their position (Mountford, 2008). However, for every-day decisions, there is not a vote, but rather, a system of consensus that they try to reach (Mountford, 2008). And thus, many have downplayed the importance of voting percentages when discussing the International Monetary Fund.

In addition to these yearly meetings, and the ability to vote on matters as they relate to the International Monetary Fund, the Board of Governors can also form advisory committees: there are a number of advisory committees currently in existence in the IMF. For example, there is the International Monetary Fund and Finance Committee (IMFC), which, among other responsibilities, is

•”… supervising the management and adaptation of the international monetary system, including the continuing operation of the adjustment process, and in this connection reviewing developments in global liquidity and the transfer of real resources to developing countries;

• … considering proposals by the executive directors to amend the Articles of Agreement; and

• …dealing with sudden disturbances that might threaten the [international monetary] system” (Resolution 54-9, in Mountford, 2008:8).

The IMFC provides guidance and opinions to both the Board of Governors and the Executive Board. While the IMFC deals with matters of eceat importance, they do not actually vote on any issues in the committee (Mountford, 2008); the voting is done in the Board of Governors.

IMF Executive Board

The Board of Executive Directors is a group within the International Monetary Fund that meets almost daily (multiple times a week)  in many cases in order to manage IMF activities. Similar to the Board of Directors, financial contributions to the IMF do matter. The five top states have representation through an Executive Director (three of them (Saudia Arabia, China, and Russia) don’t need additional votes other than their own (Mounford, 2008; Weiss, 2014)). Other states with lower financial contributions are chosen by other states every two years (Mountford, 2008), although the IMF is moving towards a purely elected system for their Executive Board (Weiss, 2014) In addition, the IMF Executive Board also chooses the Managing Director, who is both the chair and CEO, and her/his assistants (Weiss, 2014: 5). The Managing Director, which usually serves the position anywhere from 2-4 years (Mounford, 2008) plays a key role in running the IMF’s daily workings, supervising thousands of employees, as well as preparing loan and other documents before being presented to the Executive Board (Weiss, 2014: 5). For discussion on the average historical qualifications of the IMF Managing Director, see here.

International Development

International development has become a top priority for many states, international organizations, and human rights activists. The International Monetary Fund itself has attempted to play a great role in international development through the lending practices of the organization. Arguably, this lending has been an increased focus of the IMF ever since the end of the fixed exchange rate system (Weiss, 2014). In a way, one would have expected some sort of alteration in attention if the IMF was to survive, given its decreasing role in the post-currency pegged system (Hurd, 2014).

Within the International Monetary Fund Board of Governors is a Development Committee, which is combined with leaders from the World Bank, and meets bi-annually do discuss international development issues. They often work on relaying information to the boards of both the IMF and World Bank, as well as working with states regarding development and poverty reduction (Mountford, 2008).

IMF Bailouts to European States:

The International Monetary Fund played a large role in bailing out various states following the extensive European debt crisis. They helped countries such as Hungary, Latvia, Romania, Greece, Ireland, and Portugal either in the year leading up  the European debt crisis, or right after the European debt crisis began (Seitz & Jost, 2012).

IMF and the Greek Debt Crisis

The International Monetary Fund has been active in providing bailouts and loans to a number of European states following domestic and regional economic crisis. Following economic troubles in Greece in 2010, the IMF provided bailouts to the country so that it can remedy financial troubles within the country. However, this bailout was not without controversy, as “Some IMF staff and nearly a third of the board’s executive directors raised major objections to the bailout’s design” (Talley, 2014). As Talley (2014) explains, “In varying degrees, a raft of executive directors complained that growth projections were unrealistic. Some said debt restructuring was likely needed to ensure success. Many said too much of the painful adjustment burden was placed on the Greeks while asking nothing from its European creditors. Some officials at the IMF questioned whether the program would put too much political and social stress on the country.”

However, shortly after, Greece received a second bailout by the International Monetary Fund, as the IMF suggested that without this, Greece would have significant debts that could devastate its economy. Again, this was also challenged by some states such as Germany (Talley, 2014), as well as others. Greece has recently showed some improvements with its GDP surplus (Nixon, 2014). Yet, there are still some, such as the IMF, that are questioning total “capital shortfalls” in the country (Nixon, 2014). Later, in a May 2016 report on Greece, the IMF said of the later loans that “the Greek government at the time insisted—supported by its European partners—on preserving the very ambitious targets for growth, the fiscal surplus, and privatization, arguing that there was broad political support for the underlying policies. Despite the significant relief and still very ambitious assumptions, the DSA’s baseline debt trajectory was considerably worse than projected in 2010. In this context, and taking into account the new commitments by European partners to provide additional debt relief, if needed, staff maintained its assessment that debt was sustainable, but not with high probability.”

In addition, during the first week of September 2014, Greek officials met with IMF and World Bank officials in Paris. As it was stated in a Reuters (2014) article, “Some European Union officials and the International Monetary Fund have warned that Athens’ reform efforts may have slowed since the anti-bailout opposition won European elections in May. Greek officials have said they would seek to assuage those concerns during the talks in Paris this week.” Furthermore, “The two sides are set to resume discussions on the review later this month in Athens, focusing on Greece’s projected budget and financing gaps for next year and major reforms like overhauling the pension system.” However, there is still some tension, as Greece anti-bailout party is said to have roughly 28.1 percent support in the country (Reuters, 2014).


IMF Protests in Greece, Kotsolis, CC 3.0

IMF Protests in Greece, Kotsolis, CC 3.0

In 2016, The IMF has continued to speak out on the issue of the Greece budget crisis. According to a May 23, 2016 report in The Guardian, “The International Monetary Fund has called for “upfront” and “unconditional” debt relief for Greece as it warned that without immediate action the financial plight of the recession-ravaged country would deteriorate dramatically over the coming decades. In a strongly worded assessment, the IMF said that there was no prospect of Greece meeting the draconian terms of its current bailout plan and that interest payments on the soaring national debt would eat up 60% of the budget by 2060 in the absence of debt forgiveness” (Elliot, 2016). The concern with Greece is that the economy is not growing, yet, it would need to have a budget surplus of 3.5 percent of GDP in order to merely pay off interest on the debt owed (the interest on the loans is at 1.5 percent) (Elliot, 2016)

The IMF is still willing to provide additional bailout relief to Greece, but they are upset that Greece is not meeting the vast majority of conditions laid out in the loan agreements. Therefore, they are calling for other European Union countries to help by forgiving some of Greece’s debt, and also to put additional pressure on Greece to follow the outlined conditions (Elliot, 2016).

As mentioned, critics are saying that Greece is not doing enough to implement economic reforms to the country in order to reduce state spending, and increase resources (through measures such as taxes). Greece is in a tough position. Because of the very high interest rates they are unable to borrow money to spark economic reform. Plus, because of a high debt-to-gdp ratio, they are spending much of their money paying back debt. Furthermore, Greece bonds are some of the worst performing of all European Union countries (Chrysoloras & Bensasson, 2016). Therefore, it has been very difficult for the country to get out of a financial hole that they are in, and the IMF seems to suggest that there are no other options other than debt forgiveness to occur. 

Criticisms of the IMF

There have been numerous criticisms against the policies of the the International Monetary Fund and the World Bank. In this section, I will discuss concerns regarding the IMF.

IMF Policies

Arguably the most voiced criticism regarding the International Monetary Fund has been its liberal economic policies toward economically developing states. IMF policies has led many to suggest that the organization is missing nuance in exchange for across the board recommendations of economic liberalism. In fact, the organization has a history of what seems to be inefficient policies for a country’s economic prosperity. As Dr. Joseph Stiglitz (2003) explains, “[i]f we look at what happened in the financial crisis in East Asia, however, the IMF actually set forth conditions forcing countries to adopt reactionary, rather than more expansionary, policies. To be sure, the countries did not engage in beggar-thy-neighbor policies. Rather, they followed what I call “beggar-thyself” policies that were even more detrimental. Both kinds of policies exacerbated the downward spiral within the region. But, unlike beggar-thy-neighbor policies, beggar-thyself policies did not even have the saving grace of benefiting the people of the country that engaged in them” (113)…He went on to say that “the IMF was doing the exact opposite of what Keynes had intended” (113). In addition, the IMF, in its history, even tried to make it an official part of the objectives of the organization to espouse capital market liberalization. Many have pointed out the flaws of this with economically developing countries with little in the way of established industries that can effectively compete on the open international markets. In fact, even the organization itself came to see flaws with the approach (Stiglitz, 2003: 113). Furthermore, it is not enough just to privatize or liberalize for the sake of doing it, but it must in turn ensure economic growth; unfortunately the International Monetary Fund has focused on them “as ends in themselves” and not “means to an end” which would be economic development (Stiglitz, 2003: 114).

Yet, when looking at the history of IMF loans, there seems to be a great deal of support to show that the International Monetary loans were frequently filled with economical liberalization conditions that countries had to meet in order to be given the financial aid. And they often judged a country’s economy based on how liberalized they were, backing the ones that were becoming more liberal, even though this introduced various economic problems (Stiglitz, 2003: 113).

Some have even extended this argument of nuance to stronger economic states. For example, the IMF calls for countries to pay down debts, regardless of their own characteristics. However, some argue that more economically well-off states may not need to do so. For example, as Ostry, Loungani, & Purceri (2016) write: “But is there really a defensible case for countries like Germany, the United Kingdom, or the United States to pay down the public debt?” (40) since the likelihood for these states to falter is very low.

Bias in International Monetary Fund Lending Policies

Related to this last point above, there have been a number of studies that have examined the possibility of bias with regards to International Monetary Fund loans. Strom Thacker wrote about this in 1999, saying that “There are at least three reasons to suspect politics matters in the IMF. First, several studies have found extremely low rates of borrower compliance with Fund conditionality, yet the IMF continues to lend to many of these problem debtors even after earlier programs have been canceled for noncompliance…Second, each country’s representative on the Fund’s executive board is appointed by his or her home government (Treasury, in the case of the United States). Thus, it should come as no surprise that the positions of those representatives within the Fund should reflect the political interests of the national government they serve…Finally, weighted voting and the decision-making procedures of the Fund also leave room for politics.” (40-41).

In fact, Thacker (1999) conducted a study in which he looked at states’ positions regarding United Nations General Assembly voting, and compared that to how the United States voted on similar “key” issues within the UNGA. What he found was that, controlling for other factors, states that were closer aligned to the United States vote where more likely to receive IMF loans. Also, states who changed their position to become closer to that voting position of the United States receive even more significant loan benefits, even compared to states who may be closer to US interests in terms of UN vote.

One of the most recent studies on the issue of lending bias in the International Monetary Fund has been conducted by Stephen C. Nelson, in an article entitled Playing Favorites: How Shared Beliefs Help Shape the IMF’s Lending Decisions. Nelson looks at whether IMF policies are biased towards certain countries over other countries. In his approach to the question, Nelson examines neoliberal representation in a government, and compares that with the neoliberal representation in the International Monetary Fund.

As Nelson explains, he “gathered data on the number of conditions and the relative size of loans for 486 programs in the years between 1980 and 2000. [He] collected data on waivers, which allow countries that have missed binding conditions to continue to access funds, as an indicator for enforcement. [He] [relies] on indirect indicators, gleaned from a new data set that contains biographical details of more than 2,000 policy-makers in ninety developing countries, to construct a measure of the proportion of the top policy officials that are fellow neoliberals. The evidence from a battery of statistical tests reveals that as the proportion of neoliberals in the borrowing government increases, IMF deals get comparatively sweeter” (299).

IMF Conditionality

As mentioned above, the International Monetary Fund sets up conditions with regards to their loans. For a country wanting IMF loans, they must agree to the conditions set forth by the international organization. For example, “First, a member must demonstrate a balance-of-paymetns need in order to gain access to the resources of the Fund. Second, an improvement in the member’s balance of payments is the only specific target prescribed in the IMF Articles. Third, a balance-of-payments improvement is needed if the Fund is to be paid back, and the Funds own interest in repayment services provides the major legitimization of conditionality in a world of sovereign states” (Spraos, 1986: 2). But while the balance of payments is an important goal for the IMF, there are many other non-balance of payment goals that the conditions target, of which “all of these relate to instruments of policy, not to the target of the balance of payments” (Spraos, 1986: 8). So, things such as devaluation have been a frequently cited condition for the IMF (Spraos, 1986).

There have been many criticisms with regards to not only the idea of IMF conditionality for the loans, but also the ways the conditions have been applied. With regards to the notion of conditions, there are criticisms that this gives the IMF substantial power to influence the policies of a country; sovereignty is weakened by outside voices in a state’s economy. Furthermore, this criticism is heightened by those that argue the IMF has a specific bias or favor towards certain economic policies (such as neo-liberal economic positions). 

With regards to the types of conditions, there have been concerns that the IMF is focused on certain approaches, which may not be the right ones to deal with a country’s issues. Plus, some of the economic problems of a country may not be due government mismanagement, but may be external factors, something that critics argue the IMF has not done a good job of distinguishing one from the other (Spraos, 1986).

Overall, there are questions about whether the instruments that the IMF is using to reach their economic targets will get them there (Spraos, 1986).

IMF Governing Mechanisms

There have also been a number of criticisms towards the International Monetary Fund’s governing mechanisms, that some have said have affected the way they carry out their day to day operations. One of the key points of concern has been related to IMF (as well as World Bank) accountability, or namely, the lack of accountability in many cases. For example, Joseph Stigliz, in his 2003 piece “Democratizing the International Monetary Fund” argues that there have been many reasons that accountability has been difficult to obtain. For one, when an organization has various objectives, it is easy for an actor with the World Bank or IMF to say they were working towards a different goal than the objective another thought they should be focusing on. As Stiglitz (2003) explains, “Whenever there is a murkiness about an organization’s real objectives, it will be difficult to assess whether the organization has been successful or not, and hence, it will be hard to hold the organization accountable” (112). In addition, he also argues that even if there is a failure, it might be tough to prove that the organization itself was at fault. Lastly, establishing individual accountability structures in such organizations can prove to be tough to do, and thus, if there is an issue or problem, no one person will receive the criticism.

Some have also criticized the IMF’s position regarding the Managing Director, since s/he has been chosen by European states. These are similar concerns to the World Bank, as the leadership tends to be a U.S. Citizen (Weiss, 2014). Moreover, some have also noted US influence over the Managing Director position. For example, Thacker (1999), cites Miles Khaler (in Karns & Mingst, 1990) who has found that the United States government has not wanted to continue to back Managing Directors when the “accomplishments did not meet American expectations” (41).

In addition, there is tension even within the International Monetary Fund regarding voting and power mechanisms. In 2010, there was a proposed reform to International Monetary Fund quotas. As Kevin Carmichael explains in The Globe and Mail:

“At issue is the global community’s efforts to align the IMF’s power structure to match changes in the distribution of strength in the global economy. Each country is assigned shares, or quota, to match its contribution to the world’s gross domestic product. The 2010 changes — which, ironically, were prompted by President Barack Obama — would give more clout to countries such as China and India and reduce the influence of some European nations whose relative share of global GDP has shrunk over time.”

However, the United States officials are not willing to back this reform, which has left many other states within the International Monetary Fund quite frustrated. Some even have suggested the possibility of going ahead with the changes (Carmichael, 2014), despite the fact that the United States would need to approve such large changes to the International Monetary Fund.

Others  still have criticized the format of the voting in the IMF; there is a feeling that the system is biased towards those economically advantaged states. Such states, for example, can come together and push initiatives that states without a voting block, or without significant votes themselves can do nearly as easily (Thacker, 1999). In fact, Marxists and others have often pointed to such IMF and World Bank organizational structure to what they see as continued economic exploitation by those in control of these IOs.

Others point to issues of accountability within the International Monetary Fund leadership positions. For example, Stiglitz (2003) has argued that “the executive directors are accountable not so much to the governments themselves as to the particular agencies within those governments. To be sure, these agencies are accountable to the government, and the government–at least in democracies–is accountable to the people. Yet, because of the length of the chain of accountability and the weaknesses in each each link of that chain, an attenuation of accountability occurs” (118). He thinks that the IMF would act differently depending on whom it had to answer to. And often, citizens, the ones most affected, are given little representation in this process of accountability (Stiglitz, 2003).

Interestingly, he makes a comparison with the World Bank leadership, saying not only that

“[o]ne has to make them accountable to more than the financial markets and their representatives. In this respect, I think that the World Bank is substantially better off than the IMF. Its executive directors belong to aid agencies as well as financial ministries. The political perspectives of aid agencies tend to focus more on issues of social justice and equality than do those of financial ministries. Regardless of the political color of the government, aid agencies tend to be more liberal, counterbalancing the usually more conservative finance ministries. As a result, the spectrum of perspectives represented in the World Bank is broader that in the IMF. Also, in its day-to-day operations, the World Bank has to deal with environmental ministers, education ministers, and health ministers. Therefore, it has to confront a much broader swath of society than does the IMF, and it thus has become more sensitive to the broader spectrum of society” (120).

He believes that in the International Monetary Fund there has been too much attention to the finances of the IO as opposed to the conditions of those citizens in the countries the IMF has loaned money to (120).

Proving International Monetary Fund Effectiveness

One other criticism is that while the IMF has claimed to do great work in terms of stabilizing economies. However, some have wondered whether there would be similar, or possibly even better outcomes, if the IMF was not involved at all. Stiglitz (2003) speaks on this issue saying:

I have watched the IMF closely over the years, and there is a certain consistency in its responses. When things go well, the IMF claims the credit. When things go badly, it is because others did not do what the IMF told them to do in the manner that they were supposed to, they did not show adequate resolve, and, in any case, matters would have been even worse but for the IMF’s intervention. Any seeming failure is not because of mistaken policies but arises from faulty implementation, governments not doing enough, and the lack of commitment” (115).

He goes not to say that even when the IMF did criticize itself, “it appeared directed at limiting the scope of outside criticism as much as it was directed at understanding the source of the failure” (115).


Books on the IMF

Barry Eichengreen, Globalizing Capital: A History of the International Monetary System.

Eric Toussant & Damien Millett, Debt: The IMF, and the World Bank: Sixty Questions, Sixty Answers.

Ngaire Woods, The Globalizers: The IMF, the World Bank, and Their Borrowers.

Paul Blustein, And the Money Kept Rolling In (And Out): Wall Street, the IMF, and the Bankrupting of Argentina

Paul Blustein, The Chastening: Inside the Crisis that Rocked the Global Financial System and Humbled the IMF

Benn Steil, The Battle of Bretton Woods: John Maynard Keyes, Harry Dexter White, and the Remaking of the New World Order

Kurt Schüler & Andrew Rosenberg, The Bretton Woods Transcripts

James Raymond Vreeland, The IMF and Economic Development

Michael Breen, The Politics of IMF Lending

Grigore Pop-Eleches, From Economic Crisis to Reform: IMF Programs in Latin America and Eastern Europe

Additional International Monetary Fund Resources

PBS: The Crash

IMF Lending (An IMF resource)


International Monetary Fund References

Bordo, M.D. (1981). The Classical Gold Standard: Some Lessons for Today. Federal Reserve Bank of St. Louis Review, 63 (May): 2-17. Available Online:

Bordo, M. D. (1993). Chapter 1, The Bretton Woods International Monetary System: A Historical Overview, in A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform. Chicago, Illinois: University of Chicago Press.

Carmichael, K. (2014). Frustration Mounts as IMF Threatens to Move on with Overhaul Without US.  The Globe and Mail. April 12th, 2014. Available Online:

Chrysoloras, N. & Bensasson, M. (2016). No Man’s Land for Greek Bonds as Tsipras Vacillates on Reforms. Bloomberg. September 7, 2016. Available Online: 

Elliot, L. (2016). IMF tells EU it must give Greece unconditional debt relief. The Guardian. 23 May, 2016. Available Online:

Hurd, I. (2014). International Organizations: Politics, Law, and Practice. Cambridge, England. Cambridge University Press.

Mountford, A. (2008). The Formal Governance Structure of the International Monetary Fund. IEO Background Paper. Independent Evaluation Office of the International Monetary Fund. BP 08/01.

Nelson, S. C. (2014). Playing Favorites: How Shared Beliefs Shape the IMF’s Lending Decisions, International Organization, pages 297-328.

Nixon, S. (2014). Will the Fund Apologize to Greece? The Wall Street Journal, June 15th, 2014. Available Online:

Nurske, R. (1944). International Currency Experience. Geneva: League of Nations.

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