How Does the US Affect the Lending Decision Preferences of the International Monetary Fund?

Abstract

This paper examines the impact of the US on International Monetary Fund (IMF) lending decisions and explores its underlying mechanisms. The results indicate that alignment with the US diplomatic stance significantly increases the likelihood of borrowers securing IMF loans. Countries with closer economic ties to the US not only face a higher probability of obtaining IMF loans but also tend to receive larger loans. Finally, borrowers that engage in military cooperation with the US, or share military interests, are also more likely to access IMF lending. Mechanism analysis reveals that the US has exercised its influence over IMF lending preferences by appointing senior officials to key positions within the organization. However, borrowing countries can partially offset this influence by placing their own citizens in senior management roles at the IMF, thereby mitigating the adverse effects of US influence on their access to IMF loans.