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Obstacles to progress

Realities

“ So does the IMF really help developing countries? From the evidence on programme effects,

it seems that the effects of Fund programmes, and the extent of their influence on
macroeconomic policy, are over-rated. The Fund is able to secure sustained improvements in

the BoP (Balance of Payments). But it is unable to achieve its secondary objectives on growth
and inflation, or to exert decisive influence on fiscal outcomes and credit expansion. A high
proportion of its programmes break down before the end of their intended life.

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Developing-country governments have increasingly become persuaded of the importance of

financial discipline, so that the broad thrust of what the Fund seeks to do has become less
controversial

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High failure rates and a paucity of 'success stories' leave particular questions about the Fund's

ability to operate successfully in African and other low-income countries “
"Does the IMF really help Developing Countries?" 266
Overseas Development Institute
***** ***** *****
World Bank & IMF and Poverty & Equality
“ The poor benefit less from output expansion in structural adjustment reforms, just as they

may suffer less countries with many adjustment loans than they do in from the loss of old
opportunities in sectors that were countries with few such loans . “

"The Effect of International Monetary Fund and World Bank Programs on Poverty. " 267
Policy Research Working Papers. The World Bank,
Easterly, William.

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“ Studying a panel of 135 countries for the period 1980 to 2014, we examine income inequality
using multivariate regression analysis corrected for non-random selection into both IMF

programs and associated policy reforms (known as 'conditionality'). We find that, overall, policy
reforms mandated by the IMF increase income inequality in borrowing countries 71

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Our analyses indicate adverse distributional consequences for four policy areas: fiscal policy

reforms that restrain government expenditure, external sector reforms stipulating trade and
capital account liberalization, financial sector reforms entailing inflation control measures, and
reforms that restrict external debt. These effects occur one year after the incidence of an IMF

program, and persist in the medium term.
Taken together, our findings suggest that the IMF's recent attention to inequality neglects the