The IMF faces arguably the greatest test of its legitimacy since it was forged almost 80 years ago. It has weathered multiple crises, from cold war politics to currency crashes. But today it needs to confront a confluence of challenges: global co-operation is fragmenting just as the strains of indebtedness and climate change on the international economy grow larger.
The annual meetings of the IMF and World Bank, which started on Monday in Marrakech, are an opportunity to catalyse reform of the flagging global economic guardian. Without concerted effort among its members for change, the IMF could see its influence as the world’s emergency lender wane. That would be detrimental to an interconnected global economic system that needs an overarching arbiter to guarantee its stability.
Challenges to the IMF’s legitimacy come partly from recent failings. First, despite its $1tn lending capacity, it has recently struggled to deploy its financial resources effectively at scale, according to the ODI, a think-tank. Second, while the fund estimates about 60 per cent of low-income countries are at high risk of, or in, debt distress, the process of debt restructuring — which it plays a critical role in — has been painstakingly slow. Though the IMF has been impeded by intransigent creditors, its own procedures have been criticised for lacking speed and transparency.