The IMF, the WTO & the Politics of Economic Surveillance by Martin S. Edwards

Author:Martin S. Edwards [Edwards, Martin S.]
Language: eng
Format: epub
Tags: International Relations, Political Science, General
ISBN: 9780415658164
Google: o6l-DwAAQBAJ
Goodreads: 24724701
Publisher: Routledge
Published: 2015-07-08T00:00:00+00:00

3 Evaluating the record of IMF surveillance

• Geopolitical influence and IMF surveillance content

• IMF surveillance and domestic politics: Direct and indirect effects

• Washington reacts to IMF surveillance

• IMF surveillance and media coverage

• IMF surveillance and financial markets

• Does the content of surveillance matter?

• Does surveillance matter for developed country markets?

• Conclusions

Over summer 2018, Greece prepared to move on from eight years of austerity brought on by a deep fiscal crisis. With the conclusion of a debt-relief agreement from Eurozone member countries, the Greek government hosted an IMF Article IV mission in June 2018.1 As the IMF’s role had now shifted from crisis lender to watchdog, the purpose of the Article IV mission was to help advise the Greek government on how to successfully make the transition out of austerity.

The IMF mission’s concluding statement outlined several key challenges that the government needed to confront. In the view of the mission staff, there were still concerns about the sustainability of Greece’s debts. Over the long term, both fiscal discipline and a high level of growth would be essential to service the debt. Social spending is still going to need to be an imperative, as the unemployment rate in Greece is still around 20%. At the same time, the mission also cautioned against backtracking on labor market reforms. Finally, there was still a pressing need to make tax collection more efficient and to improve public sector operations so that the state can be further downsized without causing undue harm.

This country example raises many questions. While the IMF offered an agenda for Greece moving forward, the country’s past record in implementing conditionality leads to natural doubts about whether this advice would be heeded. Moreover, the geopolitical importance paid to Greece as a key Eurozone economy naturally gives rise to concerns about fairness of treatment. And on a fundamental level, while the IMF’s pronouncements carried weight with Greece’s creditors, there remains the broader question about whether the Fund’s advice would find willing domestic adherents. This chapter addresses each of these issues. Chapter 2 discussed what IMF surveillance looks like and how it has changed over time. Armed with this background, and with a better understanding of how to think about the effects of surveillance in Chapter 1, it is time to evaluate it.

The approach in this chapter is different from the material covered in Chapter 2. There, I discussed the survey results of the Fund’s Triennial Surveillance Reviews at length. What follows below is research informed by extant theory about soft law as discussed in Chapter 1. We know that the findings from surveillance missions are public information, and in this chapter I trace the direct effects (on policy makers and domestic political debate) and the indirect effects (on media and financial markets) of that information.

I approach this issue in four ways in this chapter. I develop a statistical analysis of surveillance content based on the sample of Article IV staff reports discussed in Chapter 2. This helps clarify the extent to which geopolitical biases compromise the content of IMF surveillance.

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