The IMF is under pressure but on a mission

Press quote (Financial Times)
09 October 2023

There’s a big and troubling issue here though, as well described in this recent Centre for European Reform paper on IMF lending by Sander Tordoir and Tobias Krahnke. Normally, high demand for IMF resources comes at a time of low or at least falling official interest rates, such as the 2008 global financial crisis. (Makes sense: low growth leads to both debt problems and central banks loosening.)

The CER authors suggest putting a cap on IMF lending rates. Interesting thought, but might be a tricky sell to the IMF creditor shareholders, especially the US. It’s not the way anyone would wish it, but there’s a solid reason for preserving heavy American influence over the IMF and the World Bank — it makes it that much easier to get funding for them voted through the US Congress.