Analysis: How governments use IMF bailouts to hurt political opponents

Writing in The Conversation, Dr Rodwan Abouharb (UCL Political Science) discusses his new book, 'IMF Lending: Partisanship, Punishment and Protest', co-written with Dr Bernhard Reinsberg of the University of Glasgow, which shows how governments can use the IMF for political gain. Sri Lanka received a bailout from the International Monetary Fund (IMF) in March amid soaring inflation, debt and a sovereign default. In exchange for US$3 billion (£2.4 billion), the government committed to spending cuts and tax and financial sector reforms. These have prevented Sri Lankan wages from recovering after they fell by almost half in real terms during the preceding financial crisis, leading to protests in the streets of Colombo. Sri Lankans' experience of these measures has been far from uniform. Emerging evidence indicates that the government - led by Ranil Wickremesinghe, part of the Buddhist Sinhalese majority - has concentrated the burdens primarily on ethnic minorities, who are the poorest in Sri Lanka and typically support the opposition. The government has sought to protect the elite, which is primarily Buddhist Sinhalese, by avoiding imposing wealth taxes and only making small increases in corporation tax.