WASHINGTON, May 21, 2019 (BSS/AFP) – Three-quarters of International
Monetary Fund aid programs over a six-year period attained their goals fully
or partially but there were some failings, including rose-colored growth
forecasts, the fund said Monday.
Between 2011 and 2017, the IMF oversaw 133 economic aid programs for
member countries, according to a review, the results of which were released
Monday by the fund.
“The review found three-quarters of IMF programs were successful or
partially successful in achieving their objectives, such as resolving balance
of payments problems and fostering economic growth,” the review’s authors
said in a joint blog post.
Martin Muehleisen, head of the department which conducted the review,
Petya Koeva Brooks, the deputy director, and economist Chad Steinberg, said
this was the first time such a review of IMF programs had been carried out
since the global financial crisis, “a period of unexpectedly slow economic
growth.”
The review showed that member states turn to the IMF when they are already
facing major threats to economic and financial stability.
As a result, IMF programs often serve as “shock absorbers,” allowing
countries to meet their immediate financial needs while considerably
softening blows to their economies, they said.
Furthermore, aid served as a catalyst, helping recipients to obtain
financing from other official lenders and donors, according to the report,
which was presented to the IMF’s board early this month.
“This helps protect the countries’ economies from even greater
disruption.”
The report found that for the most part members were able to spare social
spending from cuts. This was because more than a third of programs, mainly
intended for countries with little revenue, promoted spending to boost growth
and reduce poverty.
On the other hand, aid packages faced obstacles, such as economic growth
forecasts that proved too optimistic.
As a result, the review’s authors recommend more cautious use of such
forecasts and deeper analysis of the effects the fund’s programs can have on
growth.
Moreover, a “more careful diagnosis” is essential when considering how to
restructure debt burdens and a better grasp of a countries institutions and
political capacities can help avoid “aiming at unrealistic targets.”
The authors also called for more effective communication with the general
public, saying this was an “underappreciated aspect” of success.