Considering the degree of scrutiny given to the role of the International Monetary Fund in the international economy, we know little about the underlying causes of the IMF's behavior.
During the 1980, the IMF became a 'lender of last resort' for many developing country governments that had been cut off from private credit markets and faced destabilizing imbalances of payments.
After private capital began to return voluntarily to what were called the emerging market in the early 1990, the anticipated erosion for the Fund’s role in the developing world did not materialize. Faced with recurrent payment’s imbalances, pressures for currency devaluation, and the macroeconomic instability associated with crises in Latin America, Asia and Russia, the developing nation have turned with increasing frequency to IMF credits and stabilization plans.
Despite the growing body of research on the IMF’s critical role in international finance, we still have few explanations of and only patchy empirical data on why the IMF approves loans to some countries but not others.
As the Fund delves further onto the management of balance of payment and currency crises around the world, both theoretical and practical imperatives dictate that we specify more fully and test more systematically competing explanations of IMF behavior.