From Suez to Tequila: The IMF As Crisis Manager

Abstract

The IMF was established in 1944 in part to ‘give confidence to members by making [its] resources ... available to them under adequate safeguards.’ Although the intention was that the availability of the Fund's resources should prevent financial crises, in practice the institution often has found itself helping countries cope with crises after they occur. This paper examines how the role of the IMF as crisis manager has evolved, from its earliest loans to the exchange crisis that hit Mexico in December 1994. It argues that the defining moment for this role was the international debt crisis of 1982.

Macroeconomic effects of IMF-sponsored programs in Latin America: output costs, program recidivism and the vicious cycle of failed stabilizations

“…30 These results are obtained by summing the coefficients for the IMF and Latin American IMF binary variables. 31 Boughton (2000) suggests that the nature of IMF programs changed dramatically with the debt crisis of the 1980s. To examine the robustness of our result, we ran the same specification as in Table 4 column 2 for the sample later than 1982 and obtained a very similar coefficient on the Latin American IMF variable (3.4% points).…”

Financial crises and the multilateral response: What the historical record shows

“…The rapid response and large financing extended to Mexico in the 1980s reflected the Fund's new view of itself as "crisis manager" (Boughton, 2000(Boughton, , 2001. Officials were concerned with potential systemic implications of Latin American debt problems, leading the Fund to focus on containing the crisis rather than merely facilitating stabilization and structural adjustment.…”

Need for speed: The lending responsiveness of the IMF

“…The experience necessitated a dramatic revision of the Fund's lending strategy (Boughton 2000;Sachs 1995). Prior to 1982, when a country approached the IMF for a loan, it was standard practice for the Fund to first determine how much financing the borrower could expect to acquire from private as well as other official creditors before calculating the amount of financing the borrower needed from the institution.…”