IMF Assesses Its Experience with Crisis Programs

  • IMF reviews program experience for 27 countries during the global financial crisis
  • IMF work in crisis aftermath helped limit the damage
  • Lessons from crisis have informed design of subsequent IMF programs
  • By stemming the panic, shoring up confidence, and providing resources, IMF-supported programs helped avoid the global economic and financial meltdown many had feared at the outset, says the report.

    The report takes a closer look at the design and effectiveness of IMF-supported programs since the global financial crisis with a view to drawing lessons for subsequent programs. The report is part of the Fund’s ongoing effort to learn from experience, and it follows a series of previous reviews during 2009–12 that assessed program design and outcomes during the surge in IMF-supported programs since 2008.

    In an interview, Vivek Arora, Deputy Director of the IMF’s Strategy, Policy and Review Department, discusses the review of crisis programs, which covers 32 IMF arrangements between 2008 and 2013 from across the membership.

    IMF Survey : How well did the IMF handle the 2008 global financial crisis and its aftermath, according to the study?

    Arora: We argue that the Fund helped the membership avoid outcomes that were much feared at the outset. It is useful to remember the circumstances that prevailed at the time. At the time the crisis broke there was a real fear that it could lead to another great depression, or to a cascading of crises from country to country fueled by contagion as confidence evaporated, or to a meltdown of the global financial system. These outcomes were avoided. IMF support played a role in avoiding them. Admittedly, it is a counterfactual and therefore not known, but we considered the context of the times to be important.

    The Fund helped to chart a way through the crisis, using experience to inform future program design and contributing to the strengthening of policy frameworks that allowed array of feasible policy choices to be broadened over time.

    Now, the crisis also affected countries through different channels and over different time frames. The programs provided the euro area time to build firewalls that prevented contagion, they supported reforms and confidence in countries in the Middle East and North Africa that sought Fund financial support to address the economic dislocations associated with the Arab Spring in 2011, and they helped emerging economies and small states to handle the collapse of trade and...

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