Understanding pathways through financial crises and the impact of the IMF: An introduction

The International Monetary Fund is often perceived as imposing harsh policies on countries facing financial crisis. A comparison of six countries affected by the pressures of the 1990s suggests more subtle effects. In Malaysia, India, and South Africa, policymakers kept the IMF at arms length to permit a more gradual and heterodox adjustment, including capital controls in India and Malaysia. By contrast, Argentina, Turkey, and Indonesia were bound tightly into the embrace of the IMF. However, this did not push policymakers to take tough decisions. Rather, IMF loans to Argentina and Turkey permitted policymakers to postpone difficult choices as both they and the IMF sought to protect previous policies and loans. In Indonesia, by contrast, borrowing from the IMF opened up a conduit for larger political pressures that brought down the Suharto regime.