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IMF-Supported Macroeconomic Policies and the World Recession: A Look at Forty-One Borrowing Countries

October 05, 2009

Jose Antonio Cordero

Juan Antonio Montecino


October 2009, Mark Weisbrot, Rebecca Ray, Jake Johnston, Jose Antonio Cordero and Juan Antonio Montecino

This paper finds that 31 of 41 of countries with current International Monetary Fund (IMF) agreements have been subjected to pro-cyclical macroeconomic policies that, during the current global recession, would be expected to have exacerbated economic slowdowns. The pro-cyclical conditions noted in the report are either pro-cyclical fiscal or monetary policies.

The paper shows that in some cases, the IMF had relied on overly optimistic growth forecasts – significantly underestimating the impact of the world recession on borrowing countries. The paper also notes that in some cases the Fund later loosened its policy conditions after the economic performance was much worse than anticipated.

The paper arises out of discussions with the International Monetary Fund (IMF) over the Fund’s recommended macroeconomic policies during the course of the current world recession. In a panel discussion held on June 19, 2009, there was disagreement between the IMF and CEPR over whether or to what extent the IMF has supported pro-cyclical policies in borrowing countries during the current world recession. CEPR agreed to take a comprehensive look at current IMF agreements, as a prelude to further discussions with the Fund on this issue.

The paper examines IMF agreements with the countries Afghanistan, Armenia, Belarus, Bosnia and Herzegovina, Burkina Faso, Burundi, The Central African Republic, Republic of the Congo, Costa Rica, Côte d’Ivoire, Djibouti, El Salvador, Gabon, The Gambia, Georgia, Ghana, Grenada, Guatemala, Haiti, Hungary, Iceland, Kyrgyz Republic, Latvia, Liberia, Malawi, Mali, Mozambique, Mongolia, Niger, Pakistan, Romania, São Tomé and Príncipe, Senegal, Republic of Serbia, Seychelles, Sierra Leone, Tajikistan, Tanzania, Togo, Ukraine, and Zambia.

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