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

Washington dissensus:Ambiguity and conflict at the international monetary fund

During the 1990s, the International Monetary Fund failed to develop clear exchange rate policy norms for developing countries, despite the fact that oversight of the international monetary system is central to its mandate. Explaining this behaviour requires revising theories of autonomous agenda-setting and ‘ceremonial conformity’ in international organizations (IOs). I argue that IOs often adopt a posture of strategic ambiguity when confronted with a combination of divisions among major member states and a lack of consensus in the profession that provides the organization's source of expert legitimacy. However, while the ambiguity helps avoid conflict in the short run, it undermines organizational governance capacity in the medium run, resulting in coordination failures. The empirical analysis relies on internal records of Fund meetings on the exchange rate issue, interviews with former IMF officials and analysis of the organization's governance role during currency crises in Mexico, Russia, Brazil and Argentina

Global Governance Behind Closed Doors : The IMF Boardroom, the Enhanced Structural Adjustment Facility, and the Intersection of Material Power and Norm Change in Global Politics

Up on the 12th floor of its 19th Street Headquarters, the IMF Board sits in active session for an average of 7 hours per week. Although key matters of policy are decided on in the venue, the rules governing Boardroom interactions remain opaque, resting on an uneasy combination of consensual decision-making and weighted voting. Through a detailed analysis of IMF Board discussions surrounding the Enhanced Structural Adjustment Facility (ESAF), this article sheds light on the mechanics of power in this often overlooked venue of global economic governance. By exploring the key issues of default liability and loan conditionality, I demonstrate that whilst the Boardroom is a more active site of contestation than has hitherto been recognized, material power is a prime determinant of both Executive Directors’ preferences and outcomes reached from discussions. And as the decisions reached form the backbone of the ‘instruction sheet’ used by Fund staff to guide their everyday operational decisions, these outcomes—and the processes through which they were reached—were factors of primary importance in stabilizing the operational norms at the heart of a controversial phase in the contemporary history of IMF concessional lending

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

Multi-donor trust funds and fragile states: assessing the aid effectiveness of the Zimbabwe multi-donor trust fund

It is widely acknowledged that multi-donor trust funds (MDTFs) contribute to aid effectiveness. This paper challenges this assertion through assessing the aid effectiveness of the Zimbabwe Multi-Donor Trust Fund. The paper makes four key arguments. First, political relations between recipient and donor countries are vital in the functioning of MDTFs. Second, the design of MDTFs affects the delivery and functioning of the trust fund. Third, whilst the legitimacy of national governments in fragile states is often contested, targeting legitimate and credible institutions can offer tangible and life changing results. Fourth, MDTFs focusing on the recovery of key sectors such as water, sanitation and energy have direct impacts to economic recovery and people’s lives

International demands for austerity: examining the impact of the IMF on the public sector

What effects do International Monetary Fund (IMF) loans have on borrow-ing countries? Even after decades of research, no consensus exists. We offer a straight-forward explanation for the seemingly mixed effects of IMF loans. We argue thatdifferent loans have different effects because of the varied conditions attached to IMFfinancing. To demonstrate this point, we investigate IMF loans with and withoutconditions that require public sector reforms in exchange for financing. We find thatthe addition of a public sector reform condition to a country’s IMF program signifi-cantly reduces government spending on the public sector wage bill. This evidencesuggest that conditions are a key mechanism linking IMF lending to policy outcomes.Although IMF loans with public sector conditions prompt cuts to the wage bill in theshort-term, these cuts do not persist in the longer-term. Borrowers backslide oninternationally mandated spending cuts in response to domestic political pressures

The IMF and the mobilisation of foreign aid

Particularly in the context of the Millennium Development Goals, there has been much discussion of the association between the International Monetary Fund and bilateral aid flows. What role should the Fund be playing in helping to achieve the MDGs? Some observers have suggested that the Fund should seek to reduce its role in poor countries and should be minimising its own lending. They see aid donors taking on a larger role and present the IMF and aid donors as substitutes. Others envisage a much bigger lending role for the Fund. This may hint at complementarities. Although this discussion raises important policy issues there are very few studies that examine the relationship empirically. This paper attempts to help fill this gap. It explores the extent to which the IMF has had a catalytic effect on Official Development Assistance and the potential channels through which catalysis might work. It finds strong evidence of a positive association and suggests that this may have more to do with conditionality than with the provision of IMF resources. But it may not represent catalysis in the conventional sense. There is a synergy between the IMF and bilateral aid that may yet be more fully developed and exploited.