The IMF: Lender of Last Resort or Scapegoat?
    Abstract: IMF arrangements provide countries with increased access to foreign exchange during balance of payments crises. Because ready access to foreign exchange may lower the incentives of governments to pursue policies which will avoid such crises, the Fund imposes conditions upon countries in return for the loan of foreign exchange. Hence, the conventional understanding is that governments entering arrangements need an IMF loan and have no choice but to accept IMF conditions. Yet, some governments enter into IMF arrangements even when they do not need foreign exchange. Why? I argue that by tying their hands with IMF conditionality, governments can increase their bargaining leverage with domestic opponents of economic reform. Governments use IMF conditions to push through their preferred policies, which otherwise would not be approved.
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