IMF Lending and Poverty in Developing Countries

An arduous debate has developed around the question of whether the multiple IMF’s ‘stabilization’ interventions in developing countries have actually met one of the most important of its initial programmatic goals, i.e., the provision of resources to members, with a view to eliminating temporary Balance of Payments maladjustments, avoiding at the same time destroying ‘national or international prosperity’. More importantly, there have been many voices claiming that these programs have rather accentuated poverty than alleviated it. We explore this claim both theoretically and empirically. Our results show an unequivocal negative relationship between IMF lending and poverty in the developing world.