The International Monetary Fund: Politics of Conditional Lending

by James Raymond Vreeland

This is a clear and concise introduction to the International Monetary Fund (IMF) and an overview of its debates and controversies. Where did the IMF come from? What does it do? Why do so many governments participate in its programs and what are their effects? How can we best reform this key global institution? These are some of the key questions addressed. In our age of thinking global, the IMF is a crucial institution and central to understanding international relations and current affairs. Founded in the aftermath of the Second World War, its basic purposes were to facilitate world trade and promote national prosperity. The founders hoped that never again would the world experience the trade policies that led up to the Great Depression. This book outlines and questions these targets and assesses actual achievements. It also details how despite originally focusing on Europe, the Fund has gradually shifted to involvement with poorer developing countries, but to what ends and with how much success? This study both poses and tackles the tough questions facing our global community today.

Genres: Economics, Politics, International Relations

208 pages, Paperback

First published January 3, 2006

Reviews

[Nils · Rating 4 out of 5]

A helpful little book. Two things I learned from it is:
1. The Marshall Plan was specifically intended as a structural adjustment program designed to bypass the IMF, which the U.S. initially took a very dim view of.
2. While the effects of conditional lending on growth, developmental indicators, political stability, balance of payments, inflation etc. are murky when assessed statistically (basically because of the enormous complexities of isolating individual variables, and the essential impossibility of trying to guess what might have happened if the conditional loan had NOT been granted), the one absolutely consistent effect is that it dramatically increases income inequality. That’s the one strong signal in a lot of noise. Which tells us something important about it.

In addition to this, Vreeland makes it very clear that conditional loans are not simply “imposed” by the global north on the global south, but are often sotto voce embraced by recipient country elites. While there is some resistance to the receipt of a first IMF loan, as it can be represented as a surrender of economic sovereignty, once a country “loses its virginity” it often becomes something elites will be quite promiscuous about, especially elites who wish to push through unpopular policies — for example, austerity and governmental downsizing policies that will enrich elites and impoverish middle and lower classes — which would be politically impossible without the “outside pressure.”

[A · Rating 5 out of 5]

Great short book. Couldn't put it down. Read it today in one fell swoop.

[Cameron Climie · Rating 3 out of 5]

a good introduction to the IMF's internal politics, but one that reveals little beyond the surface level and does not add substantially to the broader literature on the IMF