11.5.6—International Monetary Fund

The International Monetary Fund supports monetary and financial stability, lends to members facing external-payment problems and monitors macroeconomic policies. Its programmes normally involve agreed conditions and repayment terms.

Support can provide foreign exchange and credibility while adjustment restores a sustainable position. Conditions may improve fiscal or external balances but can also impose short-run costs and distributional effects; outcomes depend on design and implementation.

A country unable to finance essential imports may receive an IMF programme linked to fiscal, monetary or exchange-rate reforms, allowing time for adjustment rather than an immediate default.

The IMF is not a universal development-project bank, and an IMF loan is not free aid; judge the conditionality and the country’s constraint.