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The IMF, Crises and Low-Income Countries: Evidence of Change?

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  • Elisa Van Waeyenberge
  • Hannah Bargawi
  • Terry McKinley

Abstract

This paper assesses the policy role of the IMF in Low-Income Countries (LICs) in the wake of the global financial crisis and in response to its own claims of policy redesign and increased flexibility. The assessment focuses on the Fund's monetary and fiscal policy stance in a selection of case study countries over the period 2008−2010. The paper finds that while the IMF has allowed for modest and short-term fiscal and monetary accommodation as an immediate response to the crisis, the Fund's medium to long-term policy agenda has remained unchanged. Both theory and evidence suggest that the Fund remains committed to its pre-crisis policy priorities. Furthermore, the global financial crisis appears to have enabled the Fund to reassert its role as guardian of an orthodox macroeconomic order. These developments are particularly troublesome given that the Fund's prevailing macroeconomic framework continues to be inconsistent with the urgent development needs of LICs, where more expansionary fiscal policies and more liquidity-focused monetary policies are needed to support structural diversification, and foster sustainable and equitable growth and development.

Suggested Citation

  • Elisa Van Waeyenberge & Hannah Bargawi & Terry McKinley, 2013. "The IMF, Crises and Low-Income Countries: Evidence of Change?," Review of Political Economy, Taylor & Francis Journals, vol. 25(1), pages 69-90, January.
    • Handle: RePEc:taf:revpoe:v:25:y:2013:i:1:p:69-90
    DOI: 10.1080/09538259.2013.737125
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    1. Mark Weisbrot & Rebecca Ray & Jake Johnston & Jose Antonio Cordero, 2009. "IMF-Supported Macroeconomic Policies and the World Recession: A Look at Forty-One Borrowing Countries," CEPR Reports and Issue Briefs 2009-37, Center for Economic and Policy Research (CEPR).
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    Cited by:

    1. Lauren Hackler & Frank Hefner & Mark D. Witte, 2020. "The Effects of IMF Loan Condition Compliance on GDP Growth," The American Economist, Sage Publications, vol. 65(1), pages 88-96, March.

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