The International and Domestic Politics of IMF Programs
How do politics influence International Monetary Fund (IMF or Fund) programs of economic reform? IMF programs consist of a loan of foreign currency and policy conditions attached to the loan. The policy conditions are intended to correct the economic problems that led the country to the Fund in the first place and thus should be guided only by technocratic considerations.
On the international face, scholars have addressed how powerful international actors, mainly the United States, use the IMF to reward their friends and punish their enemies. On the domestic face, scholars have focused on how purchaser governments use IMF conditionality to push unpopular policies…show more content… Yet, he proposes a “softcore” approach, where the bureaucratic motivations of maximizing budgets are acknowledged, but mechanisms of accountability are recognized as well. Principal-agent problems may damage accountability, but they do not appear to destroy it, as the following sections show. (James Raymond Vreeland, 2004, The International and Domestic Politics of IMF Programs, p. 2)
The Influence of the United States
Protestors against the IMF are often surprised to learn that the United States only controls about 17 percent of the votes at the IMF. This gives the US veto power over certain important decisions that require an 85 percent majority, but it is a far cry from majority control of the Fund. The IMF, however, does not operate according to strict voting rules. Votes are rarely taken. Rather, the Managing Director, who usually chairs the Executive Board meetings, takes action according to the “sense of the meeting.” This may open the door for a member of the Executive Board who represents small countries to influence the meeting with a carefully turned phrase, but it also means that opposition to the US by smaller countries cannot be expressed through block voting but must be voiced individually. Moreover, the Managing Director has been reported to rarely act against the will of the US, perhaps as is fitting, since the US has veto power over his