Inventing conditionality, exploring its politics (1946-1958)

At Bretton Woods, the IMF was endowed with a capital, though without a doctrine or a rule-book for lending - this being the consequence of disagreements between the UK and the US. This chapter shows how the Fund evaded this impasse by re-inventing itself between 1953 and 1958 as a crisis manager, which lends against policy conditions when the other financiers withdraw. This was not in the least envisaged during the 1940s. In turn, this redeployment asked that new, rather unique relations be established between the expert staff, the Board where member-states sit, and borrowing countries. The point of this chapter is to show that the rules that were then invented, of which their key characteristic is that they are non-contractual, eventually offered the legal and organizational basis on which, from the mid-1970s, the IMF developed a novel, multilateral approach to sovereign debt restructuring. This approach would shape the international debt strategies of the 1980s.