Finance, Development, and the IMF

by Boughton, James M.; Lombardi, Domenico

• ISBN13: 9780199239863
• ISBN10: 019923986X
• Format: Hardcover
• Copyright: 2009-10-04
• Publisher: Oxford University Press

Summary

This book provides an assessment of the role of the International Monetary Fund in poor countries. In recent years, a large portion of the work of the IMF has focused on the economies of low-income countries by aiming to create conditions conducive to poverty reduction and stable economic growth. More than two fifths of the IMF's 185 members are low-income countries and many others have substantial pockets of poverty in their populations. Since economic development and the reduction of poverty are the most important economic challenges that these countries face, how can the IMF best help them? How can the imperative of macroeconomic and financial stability be reconciled with the requirements for sustained economic growth? This volume brings together the research of leading economists, political scientists, and historians to suggest ways for the IMF to address these issues effectively

Author Biography

James Boughton is Historian of the International Monetary Fund and, since 2001, Assistant Director in the Policy Development and Review Department at the IMF. From 1981 until he was named Historian in 1992, he held various positions in the IMF Research Department. Dr. Boughton holds a Ph.D. in economics from Duke University, and before joining the IMF staff, he was Professor of Economics at Indiana University and had served as an economist at the OECD in Paris. His publications include a textbook on money and banking, a book on the U.S. Federal funds market, two IMF books that he co-edited, and articles in professional journals on international finance, monetary theory and policy, international policy coordination, and the history of economic thought.
Domenico Lombardi is President of The Oxford Institute for Economic Policy (OXONIA). Dr. Lombardi is an Associate Faculty Member at Nuffield College, a Senior Research Associate with the Global Economic Governance Programme as well as the Department of International Development at Queen Elizabeth House, and a Research Member at Exeter College, Oxford University. Previously a Visiting Scholar at The Institute for Fiscal Studies, London, he has advised the Executive Boards of the International Monetary Fund and the World Bank. Dr. Lombardi is a member of leading policy fora including the Brookings Institution and the Bretton Woods Committee's International Council, is a Managing Editor of World Economics and sits on the editorial boards of various journals. His academic research addresses a number of policy-related questions in macroeconomics and international economics.

Table of Contents

List of Abbreviations	p. xii
Introduction
The Role of the IMF in Low-Income Countries	p. 3
Introduction	p. 3
History and nature of the role of the IMF in low-income countries	p. 5
IMF policies and financing in low-income countries	p. 6
The role of low-income member countries in the governance of the IMF	p. 9
Concluding observations	p. 10
History and Nature of the Role of the IMF in Low-Income Countries
Brerton Woods and the Debate about Development	p. 15
Introduction	p. 15
Bretton Woods	p. 15
The clash of ideas	p. 19
The sociology of politics	p. 19
Managing the international financial system	p. 29
Approaching the international system	p. 34
More than balance of payments	p. 40
The first red herring: commodities	p. 42
The second red herring: commodities	p. 42
Conclusion: the preconditions of policy reform	p. 45
References	p. 48
Lending to and for the Poor: How the IMF's Role Has Evolved	p. 51
Introduction	p. 51
Lending to the poor	p. 53
Lending for the poor	p. 58
Concluding observations	p. 62
References	p. 63
The Case for a Universal Financial Institution	p. 64
The evolution of the IMF and its membership	p. 65
Financial classification of countries	p. 72
The modem role of the IMF	p. 74
Concluding thoughts	p. 78
References	p. 79
The Role of the IMF in Low-Income Countries: An Institutional Approach	p. 81
Introduction	p. 81
Understanding the role of the IMF in low-income member countries	p. 82
Lending policies for low-income member countries	p. 87
Challenging aspects of IMF lending policies	p. 99
IMF surveillance	p. 101
Challenging aspects of IMF surveillance	p. 103
Concluding remarks	p. 105
References	p. 106
Appendix	p. 110
IMF Policies and Financing in Low-Income Countries
Financier or Facilitator? The Changing Role of the IMF in Low-Income Countries	p. 113
Introduction	p. 113
IMF arrangements in low-income countries	p. 116
What motivates IMF programs in low-income countries?	p. 117
Balance of payments strategy in low-income countries: in pursuit of the optimum blend of adjustment and external financing	p. 119
Assessing the IMF's role in pursuing the optimum blend	p. 124
Relaxing the external financing constraint: the IMF and foreign aid	p. 125
Is the role of the IMF in low-income countries changing?	p. 129
Should the Fund retain an independent financing role in low-income countries?	p. 131
Concluding remarks	p. 132
References	p. 133
The IMF's Approach to Macroeconomic Policy in Low-Income Countries	p. 135
Introduction	p. 135
The pros and cons of IMF loans to low-income countries	p. 137
Towards a more flexible macroeconomic approach	p. 144
Debt sustainability	p. 149
Technical assistance	p. 153
Conclusion	p. 155
References	p. 156
Signaling, Aid, and IMF Financial Arrangements for Low-Income Countries	p. 158
Introduction	p. 158
The IMF ôseal of approvalö: rationale and Implications	p. 161
The financing gap	p. 168
Conclusions	p. 171
References	p. 172
Debt Relief in Low-Income Countries: Background, Evolution, and Effects	p. 175
Introduction	p. 175
What are ôdebt problemsö? And why do they arise?	p. 176
How can debt problems be handled?	p. 178
The build-up of debt in low-income countries during the 1980s and 1990s: underlying causes	p. 179
The response of creditors to low-income countries' debt: from rescheduling to relief	p. 181
Debt relief: the underlying issues applied to low-income countries	p. 182
The effects of debt relief on low-income countries	p. 184
The future of debt polity: the toll-of the IMF	p. 188
Concluding remarks	p. 189
References	p. 189
The Role and Performance of the IMF in Aid to Low-Income Countries: Lessons from Evaluation	p. 191
Introduction	p. 191
Accommodation of aid In PRGF program design	p. 194
Forecasting, analysis, and mobilization of aid	p. 197
PRGF key features	p. 199
External communications	p. 202
Conclusions and postscript	p. 205
References	p. 207
Participation in IMF Programs and Income Inequality	p. 210
Introduction	p. 210
Definitions, methodology, and data	p. 213
Cross-sectional Income inequality in developing and transition countries	p. 214
Measuring the intertemporal impact of participation in IMP programs on income inequality	p. 218
Conclusions and extensions	p. 219
References	p. 221
Appendix	p. 222
The Role of Low-Income Member Countries in the Governance of the IMF
Governance Matters: The IMF and Sub-Saharan Africa	p. 229
Introduction	p. 229
Why does governance matter?	p. 230
Setting priorities; the IMF's approach to Africa	p. 231
Implementing policies without responsiveness	p. 236
To whom should the Institution be accountable?	p. 239
References	p. 244
Proposing IMF Reforms for Low-Income Countries	p. 247
Introduction	p. 247
Why do governance reform proposals have less output value to low-Income countries?	p. 248
What kinds of reforms would low-income countries benefit from at the IMP	p. 254
Why the IMF reform debate is concerned more with governance than with functional reforms	p. 257
References	p. 260
Rethinking the Governance of the International Monetary Fund	p. 265
Introduction	p. 265
Quotas, voice, and Rawls	p. 269
Rawls's method	p. 276
The way forward	p. 292
Conclusion	p. 299
References	p. 300
Index	p. 305
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