Who Holds the IMF Accountable?
Nada Nashat
The International Monetary Fund operates according to a formula it applies to every country: a loan, followed by harsh conditions, followed by interest payments that deepen countries’ distress rather than improve their circumstances. These conditions typically include floating the currency, which brings inflation in its wake, and shrinking the public sector, which drives up unemployment, particularly among women, to the benefit of an expanding private sector that largely escapes oversight and accountability. When a country falls behind in implementing an IMF programme, it is forced to revise its policies and required to take additional measures, leaving it exposed to further economic deterioration, especially when the disbursement of the financing it needs is delayed.
But when living conditions decline during a programme, when people can no longer afford food or medical care, when jobs disappear and the informal sector fills with people who once enjoyed some measure of legal protection, who then has the right or the authority to hold the Fund to account? Before which body can those affected challenge policies the Fund helped design? And who has the power to compel it to change those policies or to redress the harm they cause?
These questions expose an imbalance in how power and responsibility are distributed within the international financial system. The Fund has broad capacity to shape countries’ economic choices, while the peoples affected by those choices have only limited capacity to hold that influence to account. Borrowing states are subject to continuous assessment, yet the accountability of the institution that helps set their economic course remains far less clear and far less effective.
The IMF is not a sovereign state in the legal sense. Under its founding charter, it is an international organisation established by its member states, and it enjoys legal personality and immunities under its Articles of Agreement. Yet it exercises influence over areas tied directly to the exercise of sovereignty, including public spending, taxation, subsidies, and monetary policy. Herein lies the paradox: how can an institution that shapes the conditions of life within countries be shielded from every form of accountability, beyond the oversight of the populations it affects, and unavailable to them for judicial recourse in the way their own governments are? In this sense, the Fund takes on the form of a “state” in the sovereignty of its decisions and their reach over other countries, yet it more closely resembles a colonial power than a state bound by law.
The problem is compounded by the fact that, although the Fund is owned by its member states, this ownership does not mean they share its power equally. Voting is not based on the principle of one country, one vote; a substantial share of voting power is tied to membership quotas, which reflect the relative weight of each economy. As a result, the major former colonial powers, with their established or wealthier economies, end up controlling the fate of poorer peoples, most of whom live in the Global South.
This disparity creates a relationship that can hardly be described as a negotiation between equals. A government facing an urgent financing crisis may agree to measures carrying heavy social and political costs, while its room to refuse remains constrained by its need for resources. This does not mean that every programme is simply dictated by a creditor state, or that borrowing governments have no agency. It does mean that formal consent alone is not enough to establish that the conditions are fair, nor to shift the entire burden of responsibility onto the weaker party.
This imbalance becomes even more significant when we return to the Fund’s own purposes. Article I of its Articles of Agreement links its work to facilitating the expansion and balanced growth of international trade, and to contributing to high levels of employment and real income and to the development of productive resources. Its fifth clause provides for making the Fund’s resources available to help members correct balance-of-payments imbalances without resorting to measures destructive of national or international prosperity. The Article concludes by requiring the Fund to be guided by these purposes in all its policies and decisions.
It follows that programmes cannot be assessed solely by a government’s ability to repay or to meet particular fiscal targets. Any assessment must also cover a programme’s impact on employment, income, services, and productive capacity. If a fiscal indicator improves while deprivation spreads, it is legitimate to ask whether the policies pursued are consistent with the very purpose that justifies the institution’s existence.
Economic decline alone is not sufficient to conclude that Article I has been breached in a legal sense. Crises arise from intertwined factors, including government decisions, wars, external shocks, and the state of the economy before borrowing. But the difficulty of establishing responsibility does not justify setting it aside. What is required is an examination of the policies the Fund imposed as conditions, the alternatives that were available, the risks it anticipated, and how far it responded to evidence of harm during implementation.
Indeed, not all criticism comes from outside the Fund. In a 2016 article published in *Finance & Development*, IMF economists examined the effects of certain neoliberal policies and concluded that the growth benefits of austerity and capital account liberalisation may have been overstated, while their costs in terms of increased inequality appeared more evident. This is a research contribution, not a verdict on every programme, but it confirms that objections to these policies rest on economic grounds that merit serious debate.
This raises a further question nested within the larger question of accountability: who interprets the rules, and who provides redress to those harmed?
The legal obstacle appears in Article IX, which grants the Fund, its property, and its assets broad immunity from every form of judicial process, except to the extent that it expressly waives this immunity or does so under the terms of a contract. This immunity is not a declaration that all of the Fund’s actions are lawful, but it places a significant barrier in the way of seeking redress through national courts.
As for disputes over the interpretation of the Articles of Agreement, Article XXIX refers them to the Executive Board, with the possibility of referral to the Board of Governors under the prescribed procedures. In other words, a state may raise a question of interpretation, but the process remains within the Fund’s own institutional structure, and it offers affected individuals no comparable path of direct access to an independent judicial body.
The result is a cycle that is difficult to break: the countries most in need of financing have the least influence over decisions; the institution enjoys judicial immunity; and disputes over the limits of its mandate are settled within its own organs. It would be inaccurate to say the Fund operates without rules or oversight. It is entirely fair, however, to ask whether its arrangements are sufficient to hold it accountable and to provide redress to those harmed, particularly when their interests conflict with the priorities of more powerful actors.
Nor can the World Bank be overlooked in this context. It was established to support the “development” of countries through projects intended to empower people, prominent examples of which include the Takaful and Karama programme and microfinance schemes. The Fund and the Bank are distinct institutions with different instruments and mandates, and the Bank’s lending is not limited to local projects: it also includes development policy financing, which provides budget support tied to institutional and public policy measures.
A local project may deliver tangible benefits, but those benefits do not exempt the broader economic framework from scrutiny. When microfinance is offered as a substitute for decent work, or when women are asked to set up home-based enterprises while public services are in retreat, it becomes necessary to ask: does the intervention respond to the community’s needs, or does it reshape those needs to fit a model that makes individuals solely responsible for their own survival?
The problem here lies in a conception of development that turns the rights to protection, work, and services into a permanent test of the individual’s capacity to compete, borrow, and bear risk. When public care recedes, the need for it does not disappear; it shifts into households, where women shoulder a disproportionate share of it, whether through unpaid work or by being absorbed into an informal sector fraught with the risks of lacking social and legal protection. UN reports have highlighted the link between austerity, the erosion of services, and the growing burden of care on women, and have called for the human rights and gender impacts of economic reforms to be assessed before they are adopted.
The World Bank does have a mechanism that receives complaints from people harmed by its failure to follow its own policies and procedures in projects and programmes within the mechanism’s mandate. This is an important space for accountability, but it remains limited and cannot be regarded as a public tribunal capable of putting the entire economic model on trial: its investigations are bound by a specific mandate and require the approval of the Board of Executive Directors.
Holding the Fund accountable begins with assigning responsibility, rather than allowing it to dissolve between the government, the institution, and the states that wield influence over it. This requires publishing the alternatives considered when programmes are designed, assessing their expected impact on rights, inequality, and care, and ensuring genuine participation by trade unions, feminist organisations, and affected communities before conditions are adopted.
Next comes the need for an independent complaints mechanism that affected people can access, with the authority to investigate harm and recommend remedies, and with rules that make responding to its findings a commitment that can be monitored. Demands for binding compensation or for limits on immunities, by contrast, would require new legal and institutional arrangements, and should not be presented as procedural rights that already exist.
Reforming the distribution of voting power remains central to the issue. Accountability will stay limited as long as the most powerful retain a greater ability to define success, determine what counts as error, and set the boundaries of review. At the same time, holding the Fund accountable does not absolve governments of their responsibility for borrowing, spending, and how burdens are distributed; rather, it prevents one party’s responsibility from being used to erase the other’s.
Success in lending to a country should not mean that it remains able to borrow and repay while its people become less and less able to live in dignity. When an institution wields influence over people’s food, healthcare, work, and future, it must bear a responsibility commensurate with that influence. The question “Who holds the IMF accountable?” is therefore a question about the right of peoples to stand as rights-holders before international financial power, and to find a path to redress when that power contributes to harming them.