Vilified and reviled just a few years ago, the IMF now appears to be an ally of African countries, from the moratorium on their debts to emergency aid in the face of Covid-19. But old habits die hard. Has the IMF really changed?
A year into Kristalina Georgieva’s stint as managing director of the International Monetary Fund (IMF), the world was pitched into the most devastating health crisis in a century. Jobs and output were eviscerated as the economic effects of Covid-19 passed from country to country like another contagion.
A pandemic is the ultimate test for an institution Georgieva describes as the “first responder” when it comes to financial mayhem. The early signs were ominous. Multilateral institutions were retreating in the face of galloping nationalism and populism. Some politicians and banks were in denial. For them, the pandemic was a hoax or a financial blip.
There seemed little prospect of a repeat of the joined-up international response to the financial crisis of 2008. Without the consent of its richest shareholders, the IMF can do little. As managing director, Georgieva’s task was more political cajoler-in-chief than stern financial supremo. She had to persuade rich countries to help poorer ones; and the poorer ones to trust the IMF.
Drawing on a career of navigating bureaucracies in the European Commission and the World Bank, she led her team in putting together “emergency financing on a scale [and at a speed] never seen before”. Within a year, the IMF has lent $290bn of its $1trn firepower. Georgieva’s mantra was turbo-charged Keynsian economics: “Spend, spend, spend […] but keep the receipts.”
It is tribute to her energetic diplomacy that most of the usual critics of the fund, whether conservative or radical, grudgingly applaud her strategy. But now is not the time for clapping, she suggests in this interview with The Africa Report. This is the end of the first act of this crisis; it is not even the intermission.