SOAS Research Online

Abstract

This thesis is about the macroeconomics of IMF stabilisation and adjustment programs which, according to official statements, are designed to "get macroeconomic fundamentals right and dismantle government-imposed distortions or put in place various institutional features of a modem market economy". From the resulting macroeconomic stability and market liberalisation, high rates of growth and reduction in poverty are to be achieved. However, experience has shown without a doubt the inadequacy of IMF programs to achieve these objectives. This thesis argues the failure lies in the IMF's underlying view of state-society relations. The IMF introduced the original financial programming (FP) model, but has since picked up neoclassical supply-side theory to address long-term structural issues. However, both in absolute terms and relative to concomitant best practice, the macroeconomic theory and rationale underlying IMF programmes have been inadequate, especially in the context of developmental needs beyond low inflation and positive growth rates. IMF programmes have failed to link the short run measures with long run objectives, and are totally inappropriate for addressing issues of structural transformation as the Ethiopian and Ugandan case studies demonstrate. Despite justifiable criticisms as well as inconclusive empirical work on the impact of its programmes, the IMF's response is increasingly to search for developments in neo-liberal political theory to vindicate its standpoint. Interest-group pressure and lack of political commitment are seen as causes of failure and policy non-adoption, which have left the major weaknesses of the programmes unexposed. Zealous approach to financial austerity and neglect of systematic intervention and the specificities attached to individual countries have set aside the developmental role of the state, despite conclusive evidence that it has contributed to industrialisation in other parts of the world, not least East Asia. Under the guise of being faithful to the market, IMF programmes are smokescreens behind which highly interventionist policies alter state-society relations, yielding a set of confusing paradigms in the study of development.