Key findings

Published: 06/12/2019

This working paper analyses the IMF’s recommendations before and after the economic crisis of 2008 in terms of their tone. Until then, most observers believed that the institution is subordinated to the Washington Consensus,1 the ten principles of economic liberalisation and the consolidation of public finances. The repercussions of the crisis resulted in many IMF economists, along with its leadership, starting to emphasise social matters and talk about inequality, rather than pure economic policy without a social element. Did this really happen? To find out, we analysed almost 1700 reports recommending reform that the IMF publishes cyclically for most of its members.

Poorer countries publish IMF reports more rarely. Analysis of these reports’ content shows that, for low-income countries, the national authorities less likely to be consulted concerning recommendations and their opinion is less likely to be incorporated.

The observed changes in the trends of the economic policy trend polarisation indicator (TPI) and the tone of recommendation indicator (RTI) correspond to changes in the pace of global GDP growth. RTI is negatively correlated with the GDP growth rate and there is a fairly weak positive correlation between TPI and GDP.

A comparison of the TPI and RTI indicators shows that an increase in reports’ negative tone corresponds to increased prioritisation of social policy. Conversely, an improvement in tone is accompanied by the increased prioritisation of liberal policy.

The tone of recommendations deteriorated significantly during two periods. The first began in 2007 and lasted until 2009 (the financial crisis). The second was in 2011. Since then, the tone has become more positive each year.

During the financial crisis, the tone of recommendations deteriorated significantly and social economic policy, along with expansive fiscal policy, became more of a priority.

The dominant trend of prioritising restrictive fiscal policy less, and prioritising an expansive one more, during the financial crisis is most visible in the richest countries. In low-income countries, the prioritisation of restrictive fiscal policy dominated.

During the financial crisis, a narrative of restrictive financial policy and liberal economic policy dominated in reports on Poland.

Subjects like inclusive or sustainable growth, as well as income inequality, were low-priority in IMF reports.

There is a discrepancy between the IMF’s declarations at the political level and the recommendations in the reports that encourage, and sometimes force, individual countries that borrow money from the Fund to reform.