IMF for President
Scapegoating the International Monetary Fund (IMF) is a popular blood sport among governments in developing countries when their economies hit the skids. But a new study by economist Axel Dreher at Germany’s University of Mannheim, "The Influence of IMF Programs on the Re-election of Debtor Governments," suggests beleaguered politicos might actually score points with voters ...
Scapegoating the International Monetary Fund (IMF) is a popular blood sport among governments in developing countries when their economies hit the skids. But a new study by economist Axel Dreher at Germany’s University of Mannheim, "The Influence of IMF Programs on the Re-election of Debtor Governments," suggests beleaguered politicos might actually score points with voters if they instead openly embraced the fund.
Scapegoating the International Monetary Fund (IMF) is a popular blood sport among governments in developing countries when their economies hit the skids. But a new study by economist Axel Dreher at Germany’s University of Mannheim, "The Influence of IMF Programs on the Re-election of Debtor Governments," suggests beleaguered politicos might actually score points with voters if they instead openly embraced the fund.
In his paper, Dreher looked at election results in 96 countries over a period of two decades and found that governments that strike a deal with the IMF prior to facing reelection can reap a political windfall at the ballot box. That’s because, if economic times are tough, voters interpret the IMF’s involvement as a sign that happy days may be here again. In 1996, for instance, the IMF agreed to a $10.2 billion loan to Russia just five months before its presidential election. "Russians read [Boris] Yeltsin’s international creditworthiness as a signal of competence," Dreher says, so "they elected him again."
Dreher, however, offers an important caveat: If a country’s economy is performing fairly well, say just above a tipping point of 5.36 percent real growth per year, then the IMF halo effect grows dimmer. Under those circumstances, politicians who couldn’t obtain credit from anyone but the lender of last resort appear inept in the eyes of the voting public.
More from Foreign Policy
Can Russia Get Used to Being China’s Little Brother?
The power dynamic between Beijing and Moscow has switched dramatically.
Xi and Putin Have the Most Consequential Undeclared Alliance in the World
It’s become more important than Washington’s official alliances today.
It’s a New Great Game. Again.
Across Central Asia, Russia’s brand is tainted by Ukraine, China’s got challenges, and Washington senses another opening.
Iraqi Kurdistan’s House of Cards Is Collapsing
The region once seemed a bright spot in the disorder unleashed by U.S. regime change. Today, things look bleak.
Sign up for Morning Brief
Foreign Policy’s flagship daily newsletter with what’s coming up around the world today. Delivered weekdays.
By submitting your email, you agree to the Privacy Policy and Terms of Use and to receive email correspondence from us. You may opt out at any time.
