IMF lending politically influenced?

3 October 2012

The hypothesis that IMF lending is subject to “political influence … cannot be discarded”, according to Andrea Presbitero and Alberto Zazzaro in the autumn 2012 edition of the World Development journal. They found that “financial exposure of foreign banks and the amount of G7 direct foreign investments in a developing country significantly increase the size of the loan the latter can obtain”. Additionally the severity of the crisis most affects the degree of low- and middle-income member countries’ participation in IMF programmes for those nations “which are political allies of G7 governments”.