From being widely seen in early 2008 as an institution in decline and irrelevant to many of the problems then facing the world economy, the International Monetary Fund (IMF) has more recently been presented as an international financial institution that is of essential importance in the aftermath of the global financial and economic crisis of 2008/09. There has been a plethora of reforms affecting the amount of resources the IMF can lend, the design of its conditionality and its organisational structure. This article assesses the extent to which these reforms will enable the IMF to enhance its role and improve its operations. It identifies and analyses challenges currently facing the IMF and claims that the future of the IMF depends crucially on the success it exhibits in meeting these challenges.

HIV/AIDS funding appears largely protected in the current crisis, as the two largest programmes – the US PEPFAR Program, and the Global Fund for AIDS, TB and Malaria – are not expected to contract. Moreover, 38% of all GFATM funding over nine funding rounds has not yet been spent by recipient governments, leaving a significant cushion particularly in Sub-Saharan Africa, where almost half of all allocations remain to be spent. Donor funding historically moves procyclically in developing countries, but there have been major shifts in recent years. During the current crisis, World Bank lending expanded by 50% as governments ramped up safety nets. Regionally, only eastern Europe was hit hard. Declining spending on that region’s social programmes has forced longdelayed reforms, but there have been negative impacts on household spending, particularly in health, though education spending has been far less affected.

The IMF advertises itself as playing a catalytic role, whereby its lending programmes induce other providers of finance to invest or lend as well. The theoretical foundations of this claim are reviewed and found to be questionable. The empirical evidence also appears to contradict the notion of a consistent and significant catalytic effect. The policy implications of weak catalysis are reviewed and alternative approaches to delivering a suitable adjustment process investigated. While some of these alternatives seem worthy of further evaluation, including greater official coordination and the use of alternative private and official pools of capital, many are politically or operationally untenable.