From One Crisis to the Next

This chapter examines Argentina's relationship with the International Monetary Fund (IMF) during the period 1985–2002. It first considers the new policy team formed by Argentine President Raúl Alfonsín and its plan to solve the country's spiraling inflation problem before discussing the successive failed stabilization programs, including Plan Austral and Plan BB, that culminated in Alfonsín's resignation and the transformation of the Argentine economy under a group of neoliberals in the Peronist government of Carlos Menem. It also analyzes the politics surrounding the series of IMF programs that preceded the economic collapse of 2001–2002, along with the United States's influence on the decision making of the Fund. Finally, it assesses the aftermath of the Argentine crisis.

Argentina and the IMF in Turbulent Times, 1976–1984

This chapter examines Argentina's relationship with the International Monetary Fund (IMF) during the period 1976–1984. It tracks Argentina's engagement with the IMF from the arrival of a Fund mission soon after the military junta took power in 1976 through to the economic meltdown in the last months of 2001, which culminated in the withdrawal of IMF support for the country and the largest sovereign default in history to that point. The Argentina-IMF case is used to test the argument linking treatment of borrowers to shared economic beliefs. The chapter first provides an overview of economic policymaking in Argentina in 1976–1981 and in 1991–2001; economic policymaking in the latter period was dominated by neoliberals. It also compares the economic beliefs of neoliberals with those of structuralists and concludes with a discussion of the breakdown in Argentine-IMF relations.

Understanding the IMF and Its Borrowers

This book examines the International Monetary Fund's (IMF) conditional lending, and particularly why each of the three core elements of its lending arrangements—the amount of credit granted to borrowing governments, the number of conditions attached to the loans, and the rigor with which the conditions are enforced—vary significantly. Drawing on both theory and evidence, it shows that shared economic beliefs strongly influence the character of the IMF's relations with its borrowers. The book argues that economic policymakers at both the international and domestic levels rely on shared economic beliefs for guidance in the presence of uncertainty, and that the IMF decision makers' neoliberal ideas are deeply embedded in the organizational culture. It also discusses three testable mechanisms linking shared beliefs to variations in loan size, conditionality, and enforcement. Finally, it explains how the IMF, through its conditional lending programs, influences who governs the economy.

Playing Favorites

This chapter examines quantitative evidence linking shared economic beliefs to variation in the International Monetary Fund's (IMF) treatment of borrowers. It first discusses the measures of IMF treatment before turning to the (indirect) indicators of policymakers' economic beliefs that are then used to construct the key variable in the analysis: the ideational distance between the IMF and the borrowing country. It also evaluates data related to the generosity, conditionality, and enforcement of nearly 500 IMF programs signed in the 1980s and 1990s. The goal is to determine whether borrowing governments with policymakers who shared beliefs with the IMF received bigger loans, fewer conditions, and easier enforcement of the conditions. The results of quantitative analysis show that there is a pattern of favoritism in a large sample of the Fund programs.

Implications, Extensions, and Speculations

This book has argued that neoliberal economic beliefs are embedded in the International Monetary Fund's (IMF) organizational culture. It has advanced a framework with pathways showing how these neoliberal ideas shared by IMF decision makers and by policymakers in borrowing governments are linked to variation in the relations between the two sides. It has provided empirical evidence supporting its claim that shared economic beliefs are indeed a powerful explanatory factor. This concluding chapter first review the book's ideational argument and compares it to the sources of systematic variation in IMF-borrower relations. It then analyzes the context for the resurgence of the IMF since 2008 and provides some preliminary statistical evidence suggesting that the IMF is still “playing favorites” when it comes to its conditional lending programs. Finally, it discusses the implications of the book's argument and findings for the study of international political economy and international organizations.

Staying Alive

This chapter examines how the design and enforcement of the International Monetary Fund's (IMF) lending arrangements affect the political survival of economic policymakers in borrowing governments. It first considers anecdotal evidence on the IMF's impact on the appointment and retention of economic officials in the borrowing country before discussing the variation in the types of officials that occupied the top policymaking posts in developing countries. The evidence suggests that the power of the IMF extends beyond influencing how the borrowing economies are governed. It argues that the IMF, through its conditional lending programs, also influences who governs the economy. It also discusses the association between participation in IMF lending arrangements and the presence of neoliberal policymakers in the borrowing government.

How Shared Economic Beliefs Shape Loan Size, Conditionality, and Enforcement Decisions

This chapter examines how the economic beliefs held by the International Monetary Fund's (IMF) decision makers and the beliefs of the officials at the helm of the borrowing governments shape loan size, conditionality, and enforcement decisions. It first considers two theoretically and empirically informed observations about the IMF-borrower relationship. First, key decisions in the conditional lending process are necessarily informed by the subjective judgments of the staff and management. Second, those judgments are often made in the presence of uncertainty. The chapter then introduces a set of mechanisms that link shared economic beliefs to the measurable outputs of the decisions about each element of the conditional lending process (access, conditionality, and enforcement). It also discusses the rise of neoliberal policymakers in developing countries and why such policymakers get less demanding (and more generous) programs from the IMF.