This chapter presents an assessment of the IMF’s role in countries in fragile and conflict-affected situations, drawing primarily on the findings of a recent evaluation report by the Independent Evaluation Office. The IMF is widely acknowledged to have made significant contributions to helping build core economic policy institutions, achieve macroeconomic stability, and promote macro-critical reforms in these countries. Quantitative analyses based on a “dynamic” list of fragile states suggest that the IMF’s program engagement has been positively associated with increased tax revenue, higher GDP growth, and greater official aid inflows. Even so, the IMF’s business model, focused on short-term macroeconomic stabilization, has a tendency to treat fragile states like any other country and does not always fit well with their long-term sustained development needs. The chapter argues that the IMF’s support for fragile states has yet to achieve its full potential and identifies areas where effectiveness can be strengthened.
Simulations of the IMF in Clusters