Does the IMF Perform a Catalytic Role?: And what if it doesn’t?

Graham Bird & Dane Rowlands

Published: March 2004

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.