International financial institutions (IFIs) are central actors shaping global development. Scholarship on these institutions’ governance has primarily explored unequal voting rights and informal channels of decision-making. Much less is known about the actual decision-making processes that transpire in the IFIs’ formal governance structures, where votes are rarely taken. This article redirects academic scrutiny to these structures to reveal hitherto unobserved state behavior. Empirically, we examine decision-making at the International Monetary Fund (IMF), a key actor in the diffusion of market-oriented reforms. We introduce a novel dataset systematizing all comments of IMF Executive Board members over 3,111 developing-country-specific discussions between 1995 and 2015. First, regression analysis reveals that the interventions by the IMF’s most powerful member-states—the United States, Germany, Japan, France, and the United Kingdom—correlate with their bilateral trade and aid interests. Second, these countries frequently reference each other in debates, demonstrating how coalitions work in practice. Third, we find that the preferences they express for market liberalization vis-à-vis countries in the Global South are associated with an increase in market-liberalizing conditions in subsequent lending programs. Taken together, this article reveals the usefulness of examining formal deliberations in IFIs, contributing to a fuller understanding of decision-making processes in the international political economy.

The International Monetary Fund (IMF) has faced scrutiny over the alignment between its public rhetoric and actual policy advice vis-a-vis progressive taxation. This article analyzes the IMF’s tax recommendations to 125 countries between 2022 and 2024, drawing on a novel dataset of 1,049 tax reform proposals extracted from Article IV surveillance reports. While the IMF has publicly endorsed progressive taxation to reduce inequality and support fiscal sustainability, our findings reveal a disconnect between these statements and on-the-ground advice. High-income countries were more likely to receive progressive tax guidance, whereas low- and middle-income countries were disproportionately advised to implement regressive measures, such as increases in value-added taxes and environmental taxes. Progressive tools like wealth and capital gains taxes were rarely recommended, and when they were, advice was concentrated in high-income contexts. This pattern suggests that IMF tax policy advice continues to reflect orthodox priorities, emphasizing revenue mobilization over equity, and thereby undermining the Fund’s professed commitment to inclusive economic policies.

Background: Countries in the Global South are currently facing momentous economic and social challenges, including major debt service problems. As in previous periods of global financial instability, a growing number of countries have turned to the International Monetary Fund (IMF) for financial assistance. The organization has a long track-record of advocating for extensive fiscal consolidation—commonly known as 'austerity'—for its borrowers. However, in recent years, the IMF has announced major initiatives for ensuring that its loans support social spending, thus aiding countries in meeting their development targets and the Sustainable Development Goals. To assess this track record, we collected spending data on 21 loans signed in the 2020-2022 period, including from all their periodic reviews up to August 2023. Results: We find that austerity measures remain a core part of the organization’s mandated policies for its borrowers: 15 of the 21 countries studied here experience a decrease in fiscal space over the course of their IMF programs. Against this fiscal backdrop, social spending floors have failed to live up to their promise. There is no streamlined definition of these floors, thus rendering their application haphazard and inconsistent. But even on their own terms, these floors lack ambition: they often do not foresee trajectories of meaningful social spending increases over time, and, when they do, many of these gains are eaten up by soaring inflation. In addition, a third of social spending floors are not implemented—a much lower implementation rate from that for austerity conditions, which the IMF prioritizes. In several instances, where floors are implemented, they are not meaningfully exceeded, thus—in practice—acting as social spending ceilings.Conclusions: The IMF’s lending programs are still heavily focused on austerity, and its strategy on social spending has not represented the sea-change that the organization advertised. At best, social spending floors act as damage control for the painful budget cuts: they are instruments of social amelioration, underpinned by principles of targeted assistance for highly disadvantaged groups. Alternative approaches rooted in principles of universalism can be employed to build up durable and resilient social protection systems.

The dominant policy response to economic crises over the past four decades has been the introduction of austerity. How has this mix of budget cuts and reforms to downsize the role of the state evolved over time? What affect has it had on social policies and on people’s lives? This book examines the activities of the world’s leading advocate of austerity: the International Monetary Fund (IMF). This international organization lends to countries facing economic trouble in exchange for the implementation of far-reaching austerity measures. Drawing on new data, the authors reveal that although the precise content of IMF-mandated austerity has changed considerably over time, the organization continues to place a high burden of reform on countries in crisis. These reforms then decrease the availability of important social services, and contribute to rises in income inequality and declines in population health. These findings form the first systematic assessment of how austerity has impacted people’s lives and livelihoods around the world. Will such policy mistakes be avoided in the post-pandemic world? The early evidence presented in this book do not raise grounds for optimism. Public expenditure projections reveal that in 2023, 86 out of 189 countries—mostly middle-income ones—face contractions in government spending compared to their 2010s average, thereby exposing a cumulative total of 2.3 billion people to the socioeconomic consequences of budget cuts.

The International Monetary Fund (IMF) is infamous for its structural adjustment programs, requiring countries to undertake policy reforms in exchange for loans. Yet, not only do countries routinely fail to implement these reforms, but they also frequently return to the IMF to start the process anew. What explains this compelling case of transnational regulatory ineffectiveness? We argue that countries are caught in a dependency trap: politically contentious policy prescriptions drive non-compliance, triggering adverse market reactions that leave countries with few sources of financing beyond the IMF, leading to their eventual return to the doors of the organization for a fresh loan. Using new data on 763 IMF programs from 1980 to 2015, we initially demonstrate that the prevalence of market-liberalizing structural reforms increases the likelihood of program interruptions. We then show that program interruptions undermine investor confidence and increase sovereign borrowing costs. Our study uncovers hitherto neglected relationships between the international institutions of regulatory capitalism, country compliance, and financial market responses.

The International Monetary Fund (IMF) is infamous for its structural adjustment programs, requiring countries to undertake policy reforms in exchange for loans. Yet, not only do countries routinely fail to implement these reforms, but they also frequently return to the IMF to start the process anew. What explains this compelling case of transnational regulatory ineffectiveness? We argue that countries are caught in a dependency trap: politically contentious policy prescriptions drive non-compliance, triggering adverse market reactions that leave countries with few sources of financing beyond the IMF, leading to their eventual return to the doors of the organization for a fresh loan. Using new data on 763 IMF programs from 1980 to 2015, we initially demonstrate that the prevalence of market-liberalizing structural reforms increases the likelihood of program interruptions. We then show that program interruptions undermine investor confidence and increase sovereign borrowing costs. Our study uncovers hitherto neglected relationships between the international institutions of regulatory capitalism, country compliance, and financial market responses.

The replication materials contain a single Stata source file (IMFBQ_AJS_do.do) and multiple sources of data, some of which are only used for materials reported in the appendix.

The convergence of health, economic and social crises over the past 1.5 years has posed profound questions over the direction of travel for the world after Covid-19. The narrative emerging out of major international organizations like the International Monetary Fund stresses avoiding a ‘divergent recovery,’ whereby some countries steam ahead with high growth rates underpinned by robust government interventions and others fall further behind. In this account, crisis aftermath should not witness budget cuts, but investment in employment and human capital formation. So, is austerity a thing of the past? In this article, we review available evidence, focusing on public spending projections by the IMF and the precise content of IMF lending arrangements. Overall, we find that the abandonment of austerity argument is partially true right now, and questionable in the medium-term. Our analysis of public expenditure projections reveals that by 2023, 83 out of 189 countries will face contractions in government spending compared to their 2010s average, thereby exposing a cumulative total of 2.3 billion people to the socio-economic consequences of budget cuts. Most of the contracting countries will be middle-income, while public spending in low-income countries is expected to stagnate at low levels. Further, the IMF's lending arrangements reveal the return of extensive austerity measures and structural reforms, reminiscent of the organization’s past policy advice. Drawing on these findings, we elaborate on how this will likely impact global public health.

The replication material consists of a single file of Stata source code (R&G_replication.do) and a single Stata dataset (R&G_replication.dta)

The replication material contains a codebook, a Stata data file (IMFAIDData.dta), Stata source code (IMFAIDCode.do) and an Excel spreadsheet contained principal and additional results contained in the article.