Back to basics : the Great Recession and the narrowing of IMF policy advice

This article contributes to the literature on the dynamics of change and continuity in the International Monetary Fund's (IMF's) policy paradigm. The IMF embarked on a process of “streamlining conditionality” during the 2000s, but many observers have argued that the IMF's policy paradigm from the 1990s remains intact. This article examines whether the scope of the IMF's policy advice to borrowers during the Great Recession narrowed in comparison to its advice to borrowers during the heyday of the Washington consensus in the 1980s and 1990s. The article uses qualitative content analysis to establish the frequency of a series of policy dialogue indicators in four sample sets of countries requesting IMF stand-by arrangements over three decades. The evidence suggests that contemporary IMF policy advice to borrowers continues to stress the importance of fiscal consolidation, with reduced emphasis on promoting the structural economic reforms associated with the Washington consensus era

Monitoring Macroeconomic Imbalances: Is EU SurveillanceMore Effective than IMF surveillance?

The paper examines the macroeconomic imbalance procedure (MIP) with the purpose of assessing its potential effectiveness compared to International Monetary Fund (IMF) surveillance. The comparison reveals that the MIP performs better than the Fund\u2019s surveillance in terms of the provision of clear and practical advice, knowledge of domestic polities and ease of activating sanctions. Neither the MIP nor the IMF, however, provide for mechanisms to prevent political considerations from interfering with the activation of sanctions and the distribution of the burden of adjustment. The MIP also does not attenuate problems of asymmetric treatment that create the conditions for public backlashes. Its single-country focus and the limited integration of macroeconomic and financial analysis are further factors that may undermine the effectiveness of the MIP. In the conclusions, the paper reflects on the factors that may help explain the limited incorporation of the lessons available from the Fund\u2019s experience into the MIP

Austerity: Neoliberal dreams come true?

The 2008 global economic crisis paved the way for the construction of a new, elitedriven, capitalcentric, shrunken welfare state project founded on ideology disguised as pragmatism and objective ‘truths’. Today, welfare states exist in a context in which a new politics of austerity sets the parameters of the debate. Austerity incorporates the neoliberal desire to shrink the (social welfare) state, deregulate labour markets and emphasise private markets as the drivers of growth, enabling a reconfiguration of the interests of capital, the needs of people and the role of the state. The new politics of austerity looks like a ‘dream come true’ for neoliberals. Or is it? There is also a powerful counternarrative that suggests that the global crisis exposed the fundamental weaknesses and limitations of neoliberalism and forced policy makers to question core principles and change direction. Focusing on the International Monetary Fund (IMF), perhaps the preeminent global neoliberal interlocutor, and using quantitative textual analysis, the article locates some evidence of movement, but little to suggest that the fundamental assumptions of neoliberalism have been displaced

Trends and Impacts of Real and Financial Globalization in the People's Republic of China and India since the 1980s

The dynamic process of integration of national economies has a long history, with two distinct waves: one, from the middle of the 19th century until its interruption with outbreak of the First World War in 1913 till the end of the Second World War in 1945. The second wave is ongoing dating from 1950. Two sub-processes of integration are usually distinguished. The first, called real integration related to flows of goods, services and factors across borders; the second called financial integration related to financial flows of claims on the nominal returns on financial assets. Financial integration has had a checkered history. Private financial flows, particularly debt flows, were evident in the first wave. During the second wave, debt flows, both intergovernmental and private banking lending were dominant during 1950–1980. Only after 1980, private non-debt flows particularly equity flows accelerated. This paper's primary focus is on the real and financial integration and their impact on trade, growth and poverty in the world's two dominant developing countries in emerging markets, namely the People's Republic of China (PRC) and India. The paper also discusses the reforms of institutional (domestic and multinational) foundations of real and financial integration, particularly the World Trade Organization, the World Bank, the International Monetary Fund, and the Group of 20. The impacts of the 2008–2009 financial crisis on the PRC and India are noted and the need for domestic financial sector reforms in both for them to cope with and respond to future financial crises is pointed out. Attention is drawn to the inadequacy of available analytical tools, in particular the absence of an appropriately integrated model of real and financial sectors to enable a meaningful assessment of the impact of financial shocks on the real sector

Safety First: Expanding the Global Financial Safety Net in Response to COVID-19

We call for strengthening the Global Financial Safety Net (GFSN) to manage the economic effects of COVID‐19, in particular the massive capital outflows from emerging market and developing economies EMDEs and the global shortage of dollar liquidity. Both the United Nations (UN) and the International Monetary Fund (IMF) estimate that EMDEs need an immediate $2.5 trillion, yet the financing available to them is just$700 to $971 billion. To meet these immediate needs we propose to: (1) broaden the coverage of the Federal Reserve currency swaps; (2) issue at least$500 billion of special drawing rights through the IMF; (3) improve the IMF’s precautionary and emergency facilities; (4) establish a multilateral swap facility at the IMF; (5) increase the resources and geographic coverage of regional financial arrangements; (6) coordinate capital flow management measures; (7) initiate debt restructuring and relief initiatives; and (8) request that credit‐rating agencies stop making downgrades during the emergency. It argues that leaders should swiftly move to address these structural gaps in the GFSN: (1) agree on a quota reform at the IMF; (2) create an appropriate sovereign debt restructuring regime; (3) expand surveillance activity; and (4) adopt IMF governance reform and strengthen its relations with all agents of the GFSN. All of these reforms must be calibrated toward a just transition to a more stable, inclusive, and sustainable global economy

Safety First: Expanding the Global Financial Safety Net in Response to COVID-19 [GEGI Working Paper 37]

We call for strengthening the Global Financial Safety Net (GFSN) to manage the economic effects of the outbreak of COVID-19, in particular the massive capital outflows from emerging market and developing economies and the global shortage of dollar liquidity. Both the United Nations (UN) and the International Monetary Fund (IMF) estimate that emerging market and developing countries (EMDEs) need an immediate $2.5 trillion, yet the financing available to them is just$700 to $971 billion. To meet these immediate needs we pro- pose to: (i) broaden the coverage of the Federal Reserve currency swaps; (ii) issue at least$500 billion of Special Drawing Rights through the IMF; (iii) improve the IMF’s precautionary and emergency facilities; (iv) establish a multilateral swap facility at the IMF; (v) increase the resources and geographic coverage of Regional Financial Arrangements; (vi) coordinate capital flow management measures; (vii) initiate debt restructuring and relief initiatives; and (viii) request that credit-rating agencies stop making downgrades during the emergency. It argues that beyond these immediate measures, leaders should swiftly move to address the following structural gaps in the GFSN: (i) agree on a quota reform at the IMF; (ii) create an appropriate Sovereign Debt Restructuring Regime; (iii) expand surveillance activity; and (iv) adopt IMF governance reform and strengthen its relations with all agents of the GFSN. All of these immediate and intermediate reforms must be calibrated toward a just transition to a more stable, inclusive, and sustainable global economy

Social spending targets in IMF concessional lending: US domestic politics and the institutional foundations of rapid operational change

This paper contributes to the literature on the mechanics of change in global economic governance. By synthesising an empirically driven case study with conceptual insights from the existing literature, I highlight three intervening variables that enabled the Legislative Mandates passed by US Congress in 2009 on the use of social-spending targets (education and health expenditure ring fences) in IMF concessional lending to be rapidly translated into operational change. The intervening variables that stood between US domestic action and rapid operational change are: first, the existence of effective enforcement mechanisms to ensure compliance from the US Executive Director with the Mandate; second, preference congruence between other primary principals and the content of the Mandate, and; third, the existence of effective enforcement mechanisms to ensure compliance from IMF staff with principals’ collectively-sanctioned goal. The outcome observed – the near universal incorporation of social-spending targets into concessional lending arrangements – adds credence to calls for further empirical work to assess the extent of a post-Washington Consensus transition at the IMF