The Lebanese journey of, and into, uncertainty is continuing, for the fifth consecutive year – and the nth time in the century-long history of this republic. Albeit under new management, the state remains stuck between a mountain of debt, a sea of social and economic inequalities, and a black hole in place of once efficient (more or less) institutions. No local or global stakeholder disagrees on the baseline: the country urgently needs tangible trust and solidarity – in form of investments and loans – as much as extreme determination to have a chance of escaping this maelstrom.
Thus in spring 2025, the Lebanese search for a sustainable path leads once again to the doors of potent investors, wealthy expatriates, friends, and international financial institutions (IFIs). But in contrast to the struggle for independence or the post-conflict landscape of 1992, the path this time appears to inescapably meander through a bureaucratic financing archipelago with a map owned by a “long John Silver” that acts as gatekeeper of any international trust: the International Monetary Fund.
Going to the IMF is neither unusual for vulnerable, productivity-impaired economies, nor for politically fragile or threatened states (Lebanon is all of that). To the contrary, venturing on a begging pilgrimage to Washington has become the default governmental journey for the poorer states of the world. The decades-long travelogue of visits by IMF negotiation teams to dysfunctional economies and battered states reads like the Who’s Who of the (geographically imprecise) “global south” from Afghanistan to Sri Lanka and Suriname to Zambia.
Among IMF program recipients, the outstanding debt numbers reveal the long dependency of countries with financial and governance deficits and the gap between developed and impoverished world. The 46 countries with the heaviest recurring use of IMF programs, according to a list compiled in the mid-2010s by Cuban-American economist Carmen Reinhart, who from 2020 for two years served as World Bank chief economist, fit two descriptions. First, they show lengthy spells (lasting from 12 to 29 years) in uninterrupted exposure to programs.
Secondly, they are overwhelmingly, with the exception of South Korea, comprised of countries in the global south and post-communist Eastern Europe.
By the IMF’s latest list of its debtors with outstanding credit at the May 2, 2025, 97 countries are in the hole for a collective 117.9 billion Special Drawing Rights (SDR), the – albeit imperfect – foreign currency reserve assets that the IMF allocates. The US dollar equivalent of these 117.9 billion SDR is $163.4 billion. Total SDR disbursements within the month of April were 9.25 billion SDR to Argentina (9.1 billion) and Mali; total repayments amounted to, by comparison to total outstanding credit, a paltry 1.8 billion SDR from altogether 37 debtors over the one-month period.
The overwhelming majority of countries with outstanding IMF credit are so-called emerging and frontier economies in the global south and central Asia, apart from Ukraine and the handful of European borrowers from the disadvantaged south-east. Given this borrower profile, it is hard to read IMF credit data as anything other than the ledger of a low-cost but stricture-happy and by definition unforgiving lender to the distressed.
All this reinforces the notion that in the contemporary arts of begging and borrowing, one does not sit with a flower bucket on a highway ramp, solicit marginal donations from shop to shop, or offer washing car windows to unwilling motorists at congested urban stop lights. When poor, one has no alternative but harass the IMF. If one is a state, that is.
Nuances and names do change but baselines stay The IMF was established in 1944 at the United Nations Monetary and Financial Conference in Bretton Woods, USA —a major international meeting where delegates from 44 allied nations came together to plan the post-World War II economic system. The headline influencers at the conference were Harry Dexter White, a US treasury official, and John Maynard Keynes, the British economist.
The original system, in hindsight usually called Bretton Woods 1, was tailored to perfectly serve the interests of the Atlantic Alliance of Western powers. Under it, the Bretton Woods institutions pursued objectives that included aiding countries in speedy reconstruction from the damages of World War II, with the IMF taking on the mission of promoting open markets and maintaining a hegemonial, pegged foreign exchange rate system that was anchored upon US dominance in ownership of global gold reserves. These IMF targets and tools adopted at the 1994 conference remained stable until Bretton Woods 1 was abruptly dissolved by a US decision to switch from a gold standard to a fiat currency in 1971.
In later years, specifically after the end of the Cold War, the system kept running in a derivative
form under the label of post-Bretton Woods system, Washington Consensus, or Bretton Woods
- Wherever the label, the system continued on the hegemonic path of Bretton Woods 1, as
developed countries and specifically the US maintained their dominance over the functionality of the global financial system, and with it the IMF, in a environment of fiat currencies. The IMF’s trend of hegemonic allegiance has been remarkably resilient, despite policy adjustments and some surface diversification (try finding a dissenting opinion or egalitarian proposal in an IMF mission’s concluding statement) in the composition of the fund’s considerable workforce of 3100, many of whom are economists whose alma maters are mainstream US business schools.
Some of the harsher policy dictates of the early IMF, such as myopic focuses on austerity in lending regimes, were adjusted on basis of market experiences. However, debt sustainability, which for many recipient countries might translate into perpetuation of their chains of indenture, was a paradigm that continued to predicate the fund’s behavior.
Pressure for redesign under new global priorities Calls for the reform of the global financial system have increased in the aftermath of multi- country shocks such as the Great Recession of 2007-09 and the Covid-19 recession. From the Great Recession until the time of this writing, academic, activist, and political critics have been urging for creation of a system to replace Bretton Woods 2 and radically reform its institutions.
Many of the latest arguments for such a step, such as the reasoning for a new trade paradigm and monetary regulative, date back to the controversies at time of the original Bretton Woods negotiations. To its detractors, the global financial system of the past 80 years has failed the mission of improving economic mobility of nations. The powerful and rich countries got only more powerful and richer, as critics of the IMF and hegemonic developed/Western powers have been lamenting vigorously since at least 1982.
At various times, civic or even violent protests erupted over issues from alleged IMF violations of democratic and sovereign principles to willful harming of environmental and social sustainability. In the 21st century to date, the global poverty trap and what is euphemistically called the middle-income trap have become less, not more escapable. While there were timely adjustments and additions to the IMF analysis of problems and catalog of proposed solutions – climate and environmental, social, and governance (ESG) priorities probably being the leading ones – the IMF in the view of many scholars has remained most useful for the continuation of the prevailing geopolitical, financial, and economic dichotomies after the end of the cold war.
Despite all ethical criticism and more recent debates on the current system’s exhaustion (up to the point of the 2025 US administration’s musings about withdrawal from their global role of the last 80 years), the IMF presently comprises 191 member countries and powerfully wields a set of tools that include financial support, surveillance, and technical assistance. Its core mandate is to ensure the stability of the international monetary system. It achieves this by monitoring member economies, providing temporary financial assistance to countries in crisis, and offering policy advice and training aimed at strengthening economic management.
