Skip to main content
SpringerLink
Log in

Coalitions of change: explaining IMF low-income country reform in the post-Washington Consensus

  • Article
  • Published:
Journal of International Relations and Development Aims and scope Submit manuscript

Abstract

Contemporary scholarship focused on the International Monetary Fund (IMF) has identified various external and internal actors involved in individual cases of Low-Income Country (LIC) reform. Currently underdeveloped in the literature is comparative exploration of how these actors inform policy shifts in the institution. This paper addresses this concern through a study of four cases of LIC reform from 1996 to 2010. Evidence from these cases suggests that a significant policy shift only occurs when a successful coalition is constructed between or among ‘primary’ (powerful states, the IMF Managing Director (MD), IMF staff) and ‘secondary’ (poor states, non-governmental organisations (NGOs), the US Congress) actors. As such, while the actors may change, coalition formation is a necessary condition for LIC policy reform. Data drawn from the cases also supports several assumptions of principal-agent and sociological organisational theory. With regard to the former, LIC staff and the MD exhibited greater agency in policy formation when powerful state preferences were divided. When the reform in question challenged organisational culture, the MD and/or senior staff in the Strategy Policy and Review Department took on the role of strategic ‘norm entrepreneur’ through persuading others to join coalitions of change. Inclusion of the most recent case of LIC change following the 2008 crisis also highlights the evolving relationship between NGOs and IMF LIC policy outcomes. While NGOs were centrally involved in LIC reform efforts in the late 1990s, they were not significant agents of change in the post-2008 period.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Figure 1
Figure 2
Figure 3

Similar content being viewed by others

Notes

  1. Since the crisis, US$17 billion has been allocated to support new concessional lending programmes. As of 2012, 62 LICs participated in concessional lending arrangements.

  2. This model is drawn directly from Nielson and Tierney’s (2003: 255) conception of the PA relationship between powerful state principals and the World Bank. Nielson and Tierney also note that divided power between legislative and executive branches also occurs in France during periods of cohabitation.

  3. The GAB, established in 1962, allows the Fund to borrow up to $27 billion from 11 industrial countries on a short-term basis. The NAB, created in 1998, serves as the first stop-gap source to supplement quota resources, particularly in times of financial crisis.

  4. As of 2005, the Government Accounting Office has identified 70 legislative mandates passed by Congress since 1945 (US Government Accounting Office 2006: 2–3).

  5. Proponents of ISI argued that developing states heavily involved in primary exports would see long-term decline in demand and price for their products, as compared with manufactured goods. ISI policies therefore focused on industrialising poor states through a series of measures that included: (1) Tariffs and quotas on imported consumer goods and overvalued exchange rates to stimulate internal consumer demand for infant industries while allowing manufacturers to import materials needed for production, (2) High investment by the state in infrastructure required by industry (roads, water, electricity), (3) Nationalisation of key industries (e.g, oil or utilities) and/or creation of state-private consortiums, and (4) Support of urban workforce through price controls and subsidies.

  6. The Paris Club is an informal group currently made up of 19 countries (primarily from the OECD) and chaired by the French Treasury. Meeting every 6 weeks in Paris, it seeks ‘to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries’. The IMF plays a prominent role in Paris Club negotiations, as any commitment to rescheduling debt often requires the debtor state in question to have an active Fund programme in place and be in good standing with reform efforts. Since 1956, 422 agreements with 88 debtor states have been reached.

  7. US Treasury Secretary Nicholas Brady (1988-1993) argued that debt reduction was necessary for some highly indebted states to regain creditworthiness. The Brady Plan stipulated that commercial banks in the United States that reduced principal or interest on debt would receive guarantees of repayment on remaining debt. Along with Japan, the Fund and Bank financed debt guarantees for 17 states (mostly from Latin America) from 1990 to 1997.

  8. By 1996, highly indebted poor countries paid nearly half of their debt payments to multilateral creditors.

  9. Both the Fund and World Bank sought to defend their position as ‘preferred creditors’ as the debate on multilateral debt relief heated up. As preferred creditors, loans and interest were paid to the Fund and Bank before commercial banks or states.

  10. The Interim Committee was renamed the International Monetary and Financial Committee (IMFC) in 1999. The IMFC meets twice a year at the annual IMF–World Bank meetings and the spring meetings. It acts primarily in an advisory role to the IMF Board of Governors but also has an informal role of agenda setting. This is manifested in its reports at the annual and spring meetings, which act as a guide for Fund activities for the following 6 months.

  11. Author interview with senior staff member from SPR Department, June, 2011, IMF, Washington DC.

  12. Author interview with senior staff member from African Department, June, 2011, IMF, Washington DC.

  13. Author interview with senior staff member from SPR Department, September, 2011, IMF, Washington DC.

  14. Author interview with senior staff member from SPR Department, September, 2011, IMF, Washington DC.

  15. Author interview with senior staff member from African Department, June, 2011, IMF, Washington DC.

  16. Author interview with senior staff member from African Department, June, 2011, IMF, Washington DC.

  17. Financed primarily by bilateral contributions and revenue raised from a 2009 sell-off of gold reserves, $15 billion in funds were raised to fund the PRGT.

  18. The RCF focuses on states with low institutional capacity and urgent financing needs. Under the RCF, no programme-based conditionality is required, and resources are allocated in a single disbursement of up to 25 per cent of the member state’s Fund quota. The interest rate on the RCF is zero per cent and must be repaid between 5.5 and 10 years. The SCF is designed for states with short-term financing needs who have suffered economic shock or some policy slippages. Under the SCF, loans are 12–24 months in length, carry a 0.25 per cent interest rate and must be repaid after 4–8 years. No PRSP is needed to qualify for the SCF and states with no current balance of payment crises can also apply for this facility on a precautionary basis. The ECF replaced the PRGF and is similar in loan length (3 years) and PRSP requirements. The ECF differs primarily in its loan terms and structural conditionality requirements. ECF loans carry a zero interest rate with a grace period of 5.5 years, and a final maturity of 10 years. LICs may access loans equalling 100 per cent of quota and outstanding concessional credit of 300 per cent of quota.

  19. Author interview with senior staff member from SPR Department, September, 2011, IMF, Washington DC.

  20. Author interview with EB Director, January, 2012, IMF, Washington DC.

  21. Author interview with EB Director, January, 2012, IMF, Washington DC.

  22. Author interview of senior staff member from Research Department, June, 2011, IMF, Washington DC.

  23. Author interview of senior Fund staff member from SPR Department, June, 2011, IMF, Washington DC.

  24. Author interview of senior Fund staff member from SPR Department, June, 2011, IMF, Washington DC.

  25. Author interview of senior Fund staff member from SPR Department, June, 2011, IMF, Washington DC.

  26. Author interview of EB Director, January, 2012, IMF, Washington DC.

  27. Author interview of EB Director, January, 2012, IMF, Washington DC.

References

  • Barnett, Michael and Martha Finnemore (2004) Rules for the World: International Organizations in Global Politics, Ithaca, NY: Cornell University Press.

    Google Scholar 

  • Berg, Andrew et al. (2009) ‘Fiscal Policy in Sub-Saharan Africa in Response to the Impact of the Global Crisis’, IMF Staff Position Note, Washington DC: IMF.

  • Berg, Andrew and Jonathan Ostroy (2011) ‘Inequality and Unsustainable Growth. Two Sides of the Same Coin?’ IMF Staff Discussion Note, Washington DC: IMF.

  • Blanchard, Olivier, Giovanni Dell’Ariccia and Paolo Mauro (2010) ‘Rethinking Macroeconomic Policy’, IMF Staff Position Note, SPN/10/03, Washington DC: IMF.

  • Bøås, Mortan and Desmond McNeill, eds (2004) Global Institutions and Development: Framing the World, London: Routledge.

    Google Scholar 

  • Bokkerink, Sasja and Ted van Hees (1998) ‘Euradad’s Campaign on Multilateral Debt: The 1996 HIPC Debt Initiative and Beyond’, Development and Practice 8 (3): 323–34.

    Article  Google Scholar 

  • Boughton, James (2009) ‘Lending to and for the Poor: How the IMF’s Role has Evolved’, in James Boughton and Domenico Lombardi, eds, Finance, Development and the IMF, 51–63, Oxford: Oxford University Press.

    Chapter  Google Scholar 

  • Broome, André (2009) ‘When do NGOs Matter? Activist Organizations as a Source of Change in the International Debt Regime’, Global Society 23 (1): 59–78.

    Article  Google Scholar 

  • Busby, Joshua (2007) ‘Bono Made Jesse Helms Cry: Jubilee 2000, Debt Relief, and Moral Action in International Politics’, International Studies Quarterly 51 (2): 247–75.

    Article  Google Scholar 

  • Callaghy, Thomas (2002) Innovation in the Sovereign Debt Regime: From the Paris Club to Enhanced HIPC, Washington DC: World Bank, Operations Evaluation Department.

    Google Scholar 

  • Chorev, Nistan and Sarah Babb (2009) ‘The Crises of Neoliberalism and the Future of International Institutions: A Comparison of the IMF and the WTO’, Theory and Society 5 (38): 459–84.

    Article  Google Scholar 

  • Chwieroth, Jeffrey (2010) Capital Ideas: The IMF and the Rise of Financial Liberalization, Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Clegg, Liam (2010) ‘In the Loop: Multilevel Feedback and the Politics of Change in the World Bank and IMF’, Journal of International Relations and Development 13 (1): 58–84.

    Article  Google Scholar 

  • Clegg, Liam (2012) ‘Global Governance Behind Closed Doors: The IMF Boardroom, the Enhanced Structural Adjustment Facility, and the Intersection of Material Power and Stabilization in Global Politics’, Review of International Organizations 3 (7): 285–308.

    Article  Google Scholar 

  • David, Wilfred (1985) The IMF Policy Paradigm: The Macroeconomics of Stabilization, Structural Adjustment, and Economic Development, New York: Praeger.

    Google Scholar 

  • Evans, Hugh (1999) ‘Debt Relief for the Poorest Countries: Why Did it Take so Long?’ Development Policy Review 3 (17): 267–79.

    Article  Google Scholar 

  • G-7 (1995) ‘Halifax Communique’, http://www.mofa.go.jp/policy/economy/summit/2000/past_summit/21/e21_a.html (accessed 14 August, 2011).

  • Hawkins, Darren, David Lake, Daniel Nielson and Michael Tierney, eds (2006) ‘Delegation Under Anarchy: States, International Organizations, and Principal-Agent Theory’, in Delegation and Agency in International Organizations, 3–38, Cambridge: Cambridge University Press.

    Chapter  Google Scholar 

  • IMF (1995a) Issues and Developments in Multilateral Debt and Financing in the Heavily Indebted Countries: Preliminary Considerations. SM 96/57, 7 February, Washington DC: IMF Archives.

  • IMF (1995b) Minutes of Executive Board Meeting. EBM 95/12, 24 February, Washington DC: IMF Archives.

  • IMF (1995c) Concluding Remarks by the Chairman: Issues and Development in Multilateral Debt and Financing for the Heavily Indebted Poor Countries-Preliminary Considerations, Executive Board Meeting 95/19. BUFF 95/18, 1 March, Washington DC: IMF Archives.

  • IMF (1996) Minutes of Executive Board Meeting. EBM 96/34, 8 April, Washington DC: IMF Archives.

  • IMF (1997) The ESAF at Ten Years: Economic Adjustment and Reform in Low-Income Countries, Washington DC: IMF.

  • IMF (1999a) Annual Report of the Executive Board for the Financial Year Ended 30 April, 1999, Washington DC: IMF.

  • IMF (1999b) Minutes of Executive Board Meeting. EBM 99/43, 16 April, Washington DC: IMF Archives.

  • IMF (1999c) Minutes of Executive Board Meeting. EBM 99/95, 30 August, Washington DC: IMF Archives.

  • IMF (1999d) Minutes of Executive Board Meeting. EBM 99/102, 13 September, Washington DC: IMF Archives.

  • IMF (2000) Annual Report of the Executive Board for the Financial Year Ended 30 April, 2000, Washington DC: IMF.

  • IMF (2011) Annual Report of the Executive Board for the Financial Year Ended 30 April, 2011, Washington DC: IMF.

  • IMF (2012) Review of Low Income Facilities, Washington DC: IMF.

  • Lavalle, Kathryn (2011) Legislating International Organization: The US Congress, the IMF and the World Bank, Oxford: Oxford University Press.

    Book  Google Scholar 

  • Lyne, Mona, David Nielson and Michael Tierney (2006) ‘Who Delegates? Alternative Models of Principals in Development Aid’, in Darren Hawkins, David Lake, Daniel Nielson and Michael Tierney, eds, Delegation and Agency in International Organizations, 41–76, Cambridge: Cambridge University Press.

    Chapter  Google Scholar 

  • Momani, Bessma (2004) ‘American Politicization of the International Monetary Fund’, Review of International Political Economy 11 (5): 880–904.

    Article  Google Scholar 

  • Momani, Bessma (2005) ‘Limits on Streamlining Fund Conditionality: The International Monetary Fund’s Organizational Culture’, Journal of International Relations and Development 8 (2): 142–63.

    Article  Google Scholar 

  • Momani, Bessma (2007) ‘IMF Staff: Missing Link in Fund Reform Proposals’, Review of International Organizations 1 (2): 39–57.

    Article  Google Scholar 

  • Momani, Bessma (2010) ‘Internal or External Norm Champions: The IMF and Multilateral Debt Relief’, in Susan Park and Antje Vetterlein, eds, Owning Development: Creating Policy Norms in the IMF and World Bank, 29–47, Cambridge: Cambridge University Press.

    Chapter  Google Scholar 

  • Moschella, Manuella (2010) Governing Risk: The IMF and Global Financial Crises, London: Palgrave Macmillan.

    Book  Google Scholar 

  • Nielson, Daniel and Michael Tierney (2003) ‘Delegation to International Organizations: Agency Theory and World Bank Environmental Reform’, International Organizations 57 (2): 241–76.

    Article  Google Scholar 

  • Nielson, Daniel, Michael Tierney and Catherine Weaver (2006) ‘Bridging the Rationalist-Constructivist Divide: Engineering Change at the World Bank’, Journal of International Relations and Development 9 (2): 107–39.

    Article  Google Scholar 

  • Öniş, Ziya and Fikret Şenses (2005) ‘Rethinking the Emerging Post-Washington Consensus’, Development and Change 32 (2): 263–90.

    Google Scholar 

  • Oxfam (2001) Making PRSPs Work: The Role of the Poverty Assessments, Washington DC: Oxfam International.

  • Park, Susan and Antje Vetterlein, eds (2010) Owning Development: Creating Policy Norms in the IMF and World Bank, Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • Polak, Jacques (1997) ‘The IMF Monetary Model: A Hearty Perennial’, Finance and Development 34 (4): 16–19.

    Google Scholar 

  • Rückert, Arne (2007) ‘Producing Neoliberal Hegemony? A Neo-Gramscian Analysis of the Poverty Reduction Strategy Paper (PRSP) in Nicaragua’, Studies in Political Economy 79: 91–118.

    Article  Google Scholar 

  • Strauss-Kahn, Dominique (2009) ‘Opening Remarks’, Conference on Successful Partnership for Africa’s Growth Challenge, Dar-es-Salaam, Tanzania, 10 March, http://www.imf.org/external/np/speeches/2009/031009.htm (accessed 14 June, 2012).

  • US Government Accountability Office (2006) ‘Treasury has Sustained its Formal Process to Promote U.S. policies at the International Monetary Fund’, GAO-06-876R, 29 June, Washington DC.

  • Vetterlein, Antje (2010) ‘Lacking Ownership: The IMF and its Engagement with Social Development as a Policy Norm’, in Susan Park and Antje Vetterlein, eds, Owning Development: Creating Policy Norms in the IMF and World Bank, 93–112, Cambridge: Cambridge University Press.

    Chapter  Google Scholar 

  • Vreeland, James (2007) The International Monetary Fund: Politics of Conditional Lending, London: Taylor and Francis.

    Google Scholar 

  • Ünay, Sakid (2010) ‘Hegemony, Aid and Power: A Neo-Gramscian Analysis of the World Bank’, European Journal of Economic and Political Studies 3 (2): 39–52.

    Google Scholar 

  • Weaver, Catherine (2008) Hypocrisy Trap: The World Bank and the Poverty of Reform, Princeton: Princeton University Press.

    Book  Google Scholar 

  • Woods, Ngaire (2006) The Globalizers: The IMF, the World Bank, and Their Borrowers, London: Cornell University Press.

    Google Scholar 

Download references

Acknowledgements

The author wishes to thank IMF archivist Premela Isaac and Jeremy Marks and Marjorie Henriquez from the Fund’s External Relations Department for their support in this project. Constructive criticism from two anonymous reviewers from the Journal of International Relations and Development and support of dissertation committee members Mark Rupert, Matt Cleary, and Jon Hanson of Syracuse University also were invaluable to this project.

Author information

Authors and Affiliations

  1. Department of History and Political Science, Saint Joseph’s College of Maine, 278 Whites Bridge Road, Standish, Maine, 04084, USA

    Mark Hibben

Authors
  1. Mark Hibben
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Hibben, M. Coalitions of change: explaining IMF low-income country reform in the post-Washington Consensus. J Int Relat Dev 18, 202–226 (2015). https://doi.org/10.1057/jird.2013.20

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/jird.2013.20

Keywords

Search

Navigation