Partisanship, protection, and punishment: how governments affect the distributional consequences of International Monetary Fund programs

Abstract

Abstract How do governments allocate the burden of adjustment of reform programs sponsored by international financial institutions? While the political economy literature is ripe with theoretical arguments about this issue, we have a limited empirical understanding of the distributional effects of these programs, except for a few informative case studies. We argue that governments allocate adjustment burdens strategically to protect their own partisan supporters while seeking to impose adjustment costs upon the partisan supporters of their opponents. Using hitherto under-explored individual-level Afrobarometer survey data from 12 Sub-Saharan African countries, we employ large-N analysis to show that individuals have consistently more negative evaluations and experiences of IMF structural adjustment programs when they supported opposition parties compared to when they supported the government party. Partisan differences in evaluations are greater when governments have greater scope for distributional politics, such as in the public sector and where programs entail more quantitative performance criteria, which leave governments discretion about how to achieve IMF program targets. Negative evaluations are also more prevalent among ethnically powerless groups compared to ethnically powerful groups. These results emphasize the significant role of borrowing governments in the implementation of IMF-mandated policy measures. They also stress the benefits of reducing the number of IMF conditions in limiting the scope for harmful distributive politics.