Post-crisis reform at the IMF: Learning to be (seen to be) a long-term development partner

Global Society

Volumn 26, Issue 1, 2012, Pages 61-81

  Clegg, Liam ^a  

^a American Political Science Association   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ECONOMIC REFORM; FINANCIAL CRISIS; IMF; POVERTY ALLEVIATION; REFORM PROCESS;

UNITED STATES;

EID: 84857088577     PISSN: 13600826     EISSN: 1469798X     Source Type: Journal    
DOI: 10.1080/13600826.2011.629986     Document Type: Article

References (125)

1. Paul Mosley, "The IMF after the Asian Crisis: The Merits and Limitations of the 'Long Term Development' Role", The World Economy, Vol. 25, No. 5 (2001), p. 597.
2. See also Lena Rethel, "Each Time is Different. The Shifting Boundaries of Emerging Market Debt", Global Society, Vol. 26, No. 1 (2012), pp. 123-143,
3. for a more general discussion of the transformation of emerging market lending and borrowing. IMF, Annual Report 2009 (Washington, DC: IMF, 2009), Annex II.
4. André Broome, "The International Monetary Fund, Crisis Management, and the Credit Crunch", Australian Journal of International Affairs, Vol. 64, No. 1 (2010), pp. 37-38.
5. For a more extensive discussion of the role of the US in global governance, see Alexandra Homolar, "Multilateralism in Crisis? The Character of US International Engagement under Obama", Global Society, Vol. 26, No. 1 (2012), pp. 103-122.
6. Thomas Andersen, Henrik Hansen and Thomas Markussen, "US Politics and World Bank IDA Lending", Journal of Development Studies, Vol. 42, No. 5 (2006), pp. 772-794;
7. Strom Thacker, "The High Politics of IMF Lending", World Politics, Vol. 52, No. 1 (1999), pp. 38-75.
8. N. Woods, "The United States and the International Financial Institutions: Power and Influence within the World Bank and IMF", in R. Foot, S. MacFarlane and M. Mastanduno (eds), US Hegemony and International Organizations (Oxford: Oxford University Press, 2003), pp. 92-114.
9. D. Hawkins, David Lake, Daniel Nielson, and Michael Tierney, "Delegation under Anarchy: States, International Organizations, and Principal-agent Theory", in D. Hawkins, David Lake, Daniel Nielson, and Michael Tierney (eds), Delegation and Agency in International Organizations (Cambridge: Cambridge University Press, 2006);
10. Daniel Nielsen and Michael Tierney, "Delegation to International Organizations: Agency Theory and World Bank Environmental Reform", International Organization, Vol. 57, No. 1 (2003), pp. 241-276.
11. D. Lake and M. McCubbins, "The Logic of Delegation to International Organizations", in D. Hawkins et al. (eds), op. cit.
12. Nielsen, Tierney and Weaver demonstrate that "parachuting in" personnel to promote the Comprehensive Development Framework was an important means of achieving operational change at the World Bank in the mid- to late 1990s.
13. Daniel Nielsen, Michael Tierney and Catherine Weaver, "Bridging the Rationalist-Constructivist Divide: Re-engineering the Culture of the World Bank", Journal of International Relations and Development, Vol. 9, No. 1 (2006), pp. 107-139.
14. André Broome, "The Importance of Being Earnest: The IMF as a Reputational Intermediary", New Political Economy, Vol. 13, No. 2 (2008), pp. 125-151.
15. For an account of how the Millennium Development Goals have become important proxy-indicators of success at theWorld Bank, see Liam Clegg, "Our Dream is aWorld Full of Poverty Indicators: The US, the World Bank, and the Power of Numbers", New Political Economy, Vol. 15, No. 4 (2010), pp. 473-492.
16. See IMF official website, available:, http://www.imf.org/external/about/govstruct.htm. (accessed 22 September 2010), pp. 125-151.
17. M. Lyne, D. Nielson and M. Tierney, "Who Delegates? Alternate Models of Principals in Development Aid", in D. Hawkins et al. (eds.), op. cit., p. 44.
18. Ibid., pp. 58-59.
19. Liam Clegg, "In the Loop: Multilevel Feedback and the Politics of Change at the World Bank and IMF", Journal of International Relations and Development, Vol. 13, No. 1 (2010), p. 65;
20. E. Gould, "Delegating IMF Conditionality: Understanding Variations in Control and Conformity", in D. Hawkins et al. (eds), op. cit., p. 310.
21. See also Manuela Moschella, "IMF Surveillance in Crisis. The Past, Present and Future of the Reform Process", Global Society, Vol. 26, No. 1 (2012), pp. 43-60.
22. Clegg, "In the Loop", op. cit.;
23. Catherine Weaver, "The World's Bank and the Bank's World", Global Governance, Vol. 13, No. 4 (2007), pp. 493-512;
24. Catherine Weaver and Susan Park, "The Role of the World Bank in Poverty Alleviation and Human Development in the Twenty-first Century", Global Governance, Vol. 13, No. 4 (2007), pp. 461-468;
25. Michael Barnett and Martha Finnemore, Rules for the World: International Organizations in World Politics (Ithaca, NY: Cornell University Press, 2004).
26. The recent edited volume of Abdelal, Blyth and Parsons serves to establish the "state of the art" of the constructivist research agenda in International Political Economy (IPE).
27. See R. Abdelal, M. Blyth and C. Parsons, "Introduction: Constructing the International Economy", in R. Abdelal, M. Blyth and C. Parsons (eds), Constructing the International Economy (Ithaca, NY: Cornell University Press, 2010), pp. 1-19.
28. Ralf Leiteritz, "Explaining Organizational Outcomes: The IMF and Capital Account Liberalization", Journal of International Relations and Development, Vol. 8, No. 1 (2005), p. 2;
29. Barnett and Finnemore, op. cit., p. 46.
30. Manuela Moschella, Governing Risk: The IMF and Global Financial Crises (Basingstoke: Palgrave, 2010);
31. Alastair Johnston, "Treating International Institutions as Social Environments", International Studies Quarterly, Vol. 45, No. 4 (2001), p. 488.
32. See final section below.
33. Jeffrey Chwieroth, Capital Ideas: The IMF and the Rise of Financial Liberalization (Princeton: Princeton University Press, 2010).
34. Catherine Weaver, Hypocrisy Trap: The Poverty of Reform at the World Bank (Ithaca, NY: Cornell University Press, 2008).
35. See also Donna Lee, "Global Trade Governance and the Challenges of African Activism in the Doha Development Agenda Negotiations", Global Society, Vol. 26, No. 1 (2012), pp. 83-101.
36. for a discussion of how coalitions of smaller states can contest the viewpoints of dominant players in the field of trade.
37. A. Vetterlein, "Change in International Organizations: Innovation or Adaptation? A Comparison of theWorld Bank and the International Monetary Fund", in D. Stone and C.Wright (eds), The World Bank and Governance: A Decade of Reform and Reaction (London: Routledge, 2006), pp. 125-144.
38. Although evident in this issue area, this US-Europe division is by no means a persistent feature of life at the IMF. On the promotion of capital account liberalisation, for example, as many pressures came from Europe as from the US.
39. See Rawi Abdelal, Capital Rules: The Construction of Global Finance (Cambridge, MA: Harvard University Press, 2007).
40. Article I, Section V. See IMF official website, available:, http://www.imf.org/external/pubs/ft/aa/aa01.htm. (accessed 22 September 2010).
41. 8. Article I, Section VI. See IMF official website, available, http://www.imf.org/external/pubs/ft/aa/aa01.htm. (accessed 22 September 2010).
42. Harold James, International Monetary Cooperation since Bretton Woods (Washington, DC: IMF, 1996), p. 78. It should be noted that Harry Dexter White, the chief US negotiator, was a staunch advocate of a more interventionist IMF.
43. James Boughton, The Silent Revolution: Global Finance and Development in the 1980s (Washington, DC: IMF, 2001), p. 558.
44. For an overview of the evolution of conditionality, see Barnett and Finnemore, op. cit., pp. 51-60;
45. Boughton, op. cit., pp. 557-636, and references therein.
46. Sydney Alexander, "Effects of Devaluation of a Trade Balance", IMF Working Paper (1952);
47. S.C. Tsiang, "Balance of Payments and Domestic Flow of Income and Expenditure", IMF Working Paper (1950).
48. Jacques Polak, "Monetary Analysis of Income Formation and Payments Problems", IMF Working Paper (1957).
49. Andrew Sumner, "In Search of the Post-Washington (Dis)consensus", Third World Quarterly, Vol. 27, No. 8 (2006), pp. 1401-1412;
50. Tony Killick, IMF Programmes in Developing Countries (London: Routledge, 1995), p. 135;
51. S. Dell, "Stabilization: The Political Economy of Overkill", in J. Williamson (ed.), IMF Conditionality (Washington, DC: Institute for International Economics, 1983), p. 35.
52. D. Finch, "Adjustment Policies and Conditionality", in Williamson (ed.), IMF Conditionality, op. cit., p. 78.
53. Boughton, op. cit., p. 559.
54. Margaret de Vries, The IMF in a Changing World (Washington, DC: IMF, 1986), pp. 118-120.
55. IMF, Annual Report 2009, op. cit., Annex II.
56. Boughton, op. cit., p. 644.
57. Edward Morse, "A New Political Economy of Oil", Journal of International Affairs, Vol. 53, No. 1 (1999), pp. 1-29.
58. Boughton, op. cit., p. 639;
59. James, op. cit., pp. 253-254, 317.
60. James, op. cit., p. 316.
61. See IMF, Annual Report 1981 (Washington, DC: IMF, 1981), p. 102.
62. The IMF's Trust Fund, opened in 1977, also served to deepen this practice. For reasons of space I will not go into the interesting history of the Trust Fund, but for further information see Boughton, op. cit., p. 639;
63. de Vries, op. cit., p. 119.
64. James, op. cit., pp. 328-335;
65. Susan Schadler, Adam Bennet, Maria Carkovik, Louis Dicks-Mireaux, Mauro Mecagni, James Morsink, and Miguel Savastano, IMF Conditionality: Experience under Stand-by and Extended Arrangements (Washington, DC: IMF, 1995), p. 3;
66. Stephan Haggard, "The Politics of Adjustment: Lessons from the IMF's Extended Fund Facility", International Organization, Vol. 39, No. 3 (1985), p. 506.
67. Boughton, op. cit., pp. 561-562, 637.
68. James, op. cit., p. 340;
69. J. Williamson, "On Judging the Success of IMF Policy Advice", in Williamson (ed.), IMF Conditionality, op. cit., pp. 640-646.
70. James, op. cit., p. 565.
71. The Interim Committee was created in 1974, when the growth in Fund membership made the plenary Board of Governors meetings impracticably large. The Committee provided policy advice to the Board, and communicated feedback and guidance to the Executive Directors and senior staff. The forum was renamed the International Monetary and Financial Committee in 1999. It contains 24 members, all of whom are IMF Governors, and reflects the constituency groupings of the Executive Board.
72. See IMF Independent Evaluation Office, Governance of the IMF (Washington, DC: IMF, 2008), pp. 10-11.
73. Special Drawing Rights (SDRs) are the unit of account used by the IMF.
74. Boughton, op. cit., p. 637.
75. Ibid., p. 649;
76. Gopal Garuda, "The Distributional Effects of IMF Programmes: A Cross-country Analysis", World Development, Vol. 28, No. 6 (2000), p. 1046.
77. For a detailed discussion of the content of "structural adjustment", see IMF Exchange and Trade Relations Department, "Monitoring of Structural Adjustment in Fund-supported Adjustment Programs" (Washington, DC: IMF Staff Paper, 1987). Archive reference EBS/87/254.
78. IMF Executive Board Minutes (Informal Session), 20 November 1987, pp. 21-22. Archive reference EBMIS/87/7.
79. IMF Executive Board Minutes, 18 December 1987, pp. 44-45. Archive reference EBM/87/175.
80. Indeed, other Executive Directors raised concerns about the incompatibility between the legal requirement that Fund resources remain "revolving" and the rolling out of medium-term arrangements with low-income members. IMF Executive Board Minutes, 18 December 1987, p. 3. Archive reference EBM/87/175.
81. IMF Executive Board Minutes, 20 November 1987, p. 22. Archive reference EBMIS/87/7.
82. Boughton, op. cit., p. 670.
83. IMF Independent Evaluation Office, Evaluation of the Prolonged Use of Fund Resources (Washington, DC: IMF, 2002), p. 44.
84. Ibid., pp. 44-48.
85. See also Michel Camdessus and Moses Naim, "A Talk with Michel Camdessus about God, Globalization, and His Years Running the IMF", Foreign Policy, Vol. 120 (2000), p. 41.
86. After the initial pressure to recycle resources from the Trust Fund had passed, the growing need for "defensive lending", alongside the danger of "cross conditionality" magnifying the impact of the failure of an arrangement, were undoubtedly significant factors underlying these trends.
87. See, for example, J. Sachs, "Strengthening IMF Programs in Highly Indebted Countries", in C. Gwin and R. Feinberg (eds), Pulling Together: The IMF in a Multipolar World (New Jersey: Transaction, 1989);
88. Graham Bird, IMF Lending to Developing Countries (London: Routledge, 1995);
89. Killick, op. cit.
90. See, for example, IMF, "Fund-Supported Programs, Fiscal Policy, and Income Distribution", IMF Occasional Paper, No. 46 (1986).
91. André Broome, "When Do NGOs Matter?", Global Society, Vol. 23, No. 1 (2009), pp. 59-78;
92. Joshua Busby, "Bono Made Jesse Helms Cry: Jubilee 2000, Debt Relief, and Moral Action in International Politics", International Studies Quarterly, Vol. 51, No. 2 (2006), pp. 247-275.
93. Susan Schadler, Franek Rozwadowski, Siddharth Tiwari and David Robinson, "Economic Adjustment in Low-income Countries", IMF Occasional Paper, No. 106 (1993).
94. This shortcoming continues to dog the IMF. In the words of a senior member of the External Relations Department, it is "not in economists' genes" to communicate evidence of operational success in accessible terms. Interview with author, November 2008.
95. Report of the International Financial Institution Advisory Panel, March 2000, p. iv.
96. See US House of Representatives official website, available:, http://www.house.gov/jec/imf/ifiac.htm. (accessed 22 September 2010).
97. An anecdote from a former Executive Director (in place at the time of the Meltzer Report) hints at this closeness, which is corroborated in the accounts and Executive Board Minutes noted in the following paragraphs. The Executive Director told of an informal office game whereby points were awarded to staff within the Directorate for convincingly matching statements by the US Executive Director to recommendations from the Meltzer Report. Interview with author, November 2008.
98. IMF, Annual Report 2009, op. cit., Annex II.
99. Staff within several Executive Directors' offices (including the US office) provided this interpretation of events, as did other senior management within the Fund. Interviews with author, November and December 2008.
100. A 2007 IEO report concluded that Fund staff "lack[ed] clarity on what they should do on the mobilisation of aid, alternative scenarios, and the application of poverty reduction and social impact analysis", and that Executive Directors had expressed a range of views on these issues.
101. See IMF Independent Evaluation Office, The IMF and Aid to Sub-Saharan Africa (Washington, DC: IMF, 2007), pp. vii, 87-89.
102. IMF Executive Board Minutes, 21 July 2004, p. 73. Archive Reference EBM/04/71.
103. The UK statement noted that "the Fund needs to decide how the PRGF will evolve so that it can best provide assistance", and that "the IEO report provides a useful set of principles for developments in this area".
104. Ibid., p. 91.
105. The German statement noted that "the many problems the [PRGF] is facing are not due to insufficient staff resources being devoted to it. Rather, we think that low-income countries themselves could, in some instances, have done more to make the [PRGF] more successful-a question that has not received sufficient attention in the evaluation".
106. Ibid., p. 97.
107. Interview with author, December 2008.
108. Interview with author, December 2008.
109. The size of bilateral contributions will ultimately be dependent on the level of demand for concessional loans. In July 2010 the Norwegian government agreed an SDR 300 million loan-based package, and if sufficient demand is demonstrated the UK government will consider committing additional resources. Interview with senior member of staff at the UK Department for International Development, August 2010.
110. Interview with author, December 2008.
111. The IEO's review of the PRGF, for example, contains the following assessment: "Since the evaluation is about how the IMF can help countries improve their prospects for growth and poverty reduction, it is worth emphasising at the outset that knowledge of the links between policies and growth remains limited and understanding of the links between policies and poverty reduction even less so". IMF Independent Evaluation Office, Evaluation of the IMF's Role in the Poverty Reduction Strategy Papers and the Poverty Reduction and Growth Facility (Washington, DC: IMF, 2004), p. 17.
112. IMF, Signalling by the Fund: A Historic Review (Washington, DC: IMF, 2004), pp. 25-26.
113. Jacqueline Best, "Why the Economy is Often the Exception to Politics as Usual", Theory, Culture, and Society, Vol. 24, No. 4. (2007), p. 89.
114. Garuda, op. cit.;
115. Giavanni Cornia, Richard Jolly and Frances Stewart, Adjustment with a Human Face (Oxford: Oxford University Press, 1987).
116. IMF External Relations Department, "Strengthening the Fund's External Communications: Plans and Resource Implications" (Washington, DC: IMF Staff Paper, 2000), p. 2. Archive reference SM/00/14.
117. IMF, "Guide for Staff Relations with Civil Society Organizations" (Washington, DC: IMF, 2003).
118. Interview with senior External Relations Department staff, December 2008.
119. See Maureen Burke, "Despite Crisis, Poor Countries Try to Maintain Social Spending", IMF Survey Magazine (2010), pp. 1-3.
120. Burke's heavily trailed article was itself an attempt by EXR to highlight a 2009 report covering this trend.
121. Burke, op. cit., p. 1
122. T. Gutner, "When 'Doing Good' Does Not: The IMF and the Millennium Development Goals", in M. Finnemore and S. Sell (eds), Governing the Globe (Cambridge: Cambridge University Press, 2010), pp. 266-291.
123. On the mechanics of "blame-shifting" in global governance, see David Bailey and André Broome, "The Blame Game: From Blame Avoidance to Multi-level Blame Displacement", Paper presented at the International Studies Association Annual Conference, New Orleans, 17 February 2010.
124. See Clegg, "Our Dream is a World Full of Poverty Indicators", op. cit.
125. Burke, op. cit.