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Few countries have complete autonomy in macroeconomic policy. For many, policy is conducted in collaboration with the International Monetary Fund (IMF) or supervised by the IMF. The module examines the changing roles of the IMF, the nature of economic policies it encourages countries to pursue, and some of the effects these policies have on the economic environment of business, on the financial sector, and on social conditions. The module gives a simple introduction to the basic IMF economic policy framework, 'financial programming'. Using different types of countries, including transition economies and developing countries as case studies, it enables you to study issues such as the role of capital controls and the problems of highly indebted countries.

Learning outcomes

When you have completed this module, you will be able to do the following:

  • identify who pursues stabilisation policies, and why
  • distinguish between countries that seek to stabilise on their own, and those that seek help in doing so
  • outline and discuss the role, function and operations of the IMF and its approach to stabilisation
  • discuss the influence of the financial sector in precipitating instability
  • explain the prevalent stabilisation theories and assess their appropriateness in differing circumstances
  • identify and discuss the major criticisms and controversies that the IMF's approach has elicited
  • explain the particular problems and prescribed remedies for low-income countries seeking to stabilise their economies.

Study materials

Study guide

You will receive a looseleaf binder containing eight units. The units are carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the further assigned readings. The unit files are also available to download from the Virtual Learning Environment.


You will receive three volumes of Readings, which are a compilation of recently published articles or seminal writings which augment and illustrate the main text.

  • IMF (2015) Ghana: Request For A Three-Year Arrangement Under The Extended Credit Facility; Staff Report; Press Release; and Statement by the Executive Director for Ghana, Country Report No. 15/103
  • IMF (2014) South Africa: Financial System Stability Assessment, Country Report No. 14/340
Virtual learning environment

You will have access to the VLE, which is a web-accessed learning environment. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Module overview

Unit 1 Macroeconomic Stabilisation and the Role of the IMF
  • 1.1 Introduction
  • 1.2 The Character of the International Monetary Fund
  • 1.3 The Articles of Agreement
  • 1.4 Three Key Functions Performed by the IMF
  • 1.5 Organisational Structure of the IMF
  • 1.6 The Executive Board, Constituency System and Advisory Organs
  • 1.7 The Departmental Structure of the IMF
  • 1.8 The Process Followed in Negotiating a Financing Arrangement with the IMF
  • 1.9 Types of IMF Lending
  • 1.10 Types of IMF Conditionality
  • 1.11 Conclusion
Unit 2 The IMF's Approach to Stabilisation
  • 2.1 Introduction
  • 2.2 Trends in the Use of IMF-Supported Stabilisation Programmes
  • 2.3 Special Drawing Rights (SDRs)
  • 2.4 A Model to the Rescue? Mundell-Fleming
  • 2.5 Scenarios Using the IS-LM-BP Schedules
  • 2.6 The Theoretical Framework For IMF Stabilisation Policies
  • 2.7 The Financial Programming Approach – Four Key Identities
  • 2.8 Moving from Identities to Behavioural Assumptions
  • 2.9 Key Questions and Issues – Jamaica 2010
  • 2.10 Conclusion
Unit 3 Alternative Approaches to Stabilisation
  • 3.1 Introduction
  • 3.2 Key Shortcomings and Criticisms of the IMF Financial Programming Approach
  • 3.3 Further Issues in Evaluating the Financial Programming Approach
  • 3.4 How Can the IMF Programming Approach Be Improved?
Unit 4 Stabilisation and the Financial Sector
  • 4.1 Introduction
  • 4.2 Capital Flows and Stabilisation Policy
  • 4.3 The Emerging Market Crisis
  • 4.4 The Global Financial and Economic Crisis
  • 4.5 Conclusion
Unit 5 Stabilisation Policy and Financial Sector – Institutional Responses to Recent Crises
  • 5.1 Introduction
  • 5.2 Financial Sector Crises – the Role and Responses of the IMF
  • 5.3 Developing International Standards and Codes
  • 5.4 The IMF's Role in Crisis Prevention and Resolution
  • 5.5 Financial Crises – Other International Responses
  • 5.6 Conclusion
Unit 6 Stabilisation and the Financial Sector – Some Challenges and Controversies
  • 6.1 Introduction
  • 6.2 Capital Account Liberalisation
  • 6.3 Capital Controls
  • 6.4 Criticisms of IMF Stabilisation Policies
  • 6.5 Criticisms of the IMF's Response During the EME Crisis
  • 6.6 Criticisms of IMF Policy During the Global Financial Crisis
  • 6.7 Conclusion
Unit 7 Stabilisation and Low-Income Countries
  • 7.1 Introduction
  • 7.2 IMF Concessional Lending to Low-Income Countries
  • 7.3 The Poverty Reduction Strategy Paper (PRSP)
  • 7.4 Debt Relief
  • 7.5 Emergency Lending
  • 7.6 IMF Technical Assistance (TA)
Unit 8 Challenges for Low-Income Countries
  • 8.1 Introduction
  • 8.2 Quotas and Voting Shares of Low-Income Countries
  • 8.3 Access Limits
  • 8.4 Additional Challenges for Developing Countries
  • 8.5 Social Safety Nets
  • 8.6 Conclusion

Tuition and assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 5, and the second assignment at the end of the module, on the Tuesday after Week 8. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in September/October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in April each year.

Module sample

Click on the link below to download the module sample document in PDF.