From Suez to Tequila: The IMF As Crisis Manager

IMF Working Papers, July 1, 1997

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The IMF was established in 1944 in part to “give confidence” to member countries by providing short-term credits.
Although the intention was that the availability of the Fund’s resources should prevent countries from experiencing financial crises, in practice the institution often has found itself helping its members cope with crises after they occur.
This paper examines how the role of the IMF as crisis manager has evolved over time, from its earliest loans to the exchange crisis that hit Mexico in December 1994.
The paper argues that the defining moment for this role was the international debt crisis of 1982.

The Fund’s original purpose emphasized prevention—“to ‘give confidence’ to member countries by providing short-term credits”—but operational experience shows repeated engagement in crisis response after crises materialize.
The evolution of the IMF’s crisis-management role is traced across multiple episodes, culminating in analysis of the December 1994 exchange crisis in Mexico.
The international debt crisis of 1982 is identified as the pivotal event shaping the IMF’s function as a crisis manager.

Subject: Balance of payments, Balance of payments need, Banking, Capital outflows, Credit, Current account deficits, Financial crises, Money
Keywords: balance of payments, Balance of payments need, Capital outflows, Credit, crisis management, crisis manager, Current account deficits, economic crisis, exchange market crisis, financial crises, financial crisis, financial history, Fund, fund lend Mexico, fund staff, fund surveillance, Global, gold market crisis, IMF, international monetary system, market, WP

From Suez to Tequila: The IMF as Crisis Manager - WP/97/90
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