The Politics of Economic Policy-Making: Conceptualizing IMF Lending

Abstract

The previous chapter introduced the three key roles that the Fund has played in the world economy since its creation in 1944, and outlined the controversies that surround them because of the way in which they are perceived to impinge on the sovereignty of nation states in the field of economic policy-making. In light of these views, the chapter also outlined the two principal ways in which the Fund has been understood to have played a role in managing financial crises. Both assigned a positive (active) role for the IMF, the first by providing advice and imposing conditionality on reluctant reformers, the second by consolidating norms about good economic governance and assisting domestic reformers with potentially difficult transitions. It also outlined a third role for the Fund, which understood it to play a negative (passive) role in financial crisis management, acting principally as a buttress between domestic economic policy-makers and potentially unpopular political consequences of reform.