IMF Programs and the Risk of a Coup d'etat
Journal of Conflict Resolution
Published online on August 21, 2015
Abstract
Leaders use the distribution of economic rents to maintain the political support of regime elites. When countries join International Monetary Fund (IMF) programs, they are often required to implement a variety of free market-inspired reforms—such as privatization, reductions in government spending, and the restructuring of financial institutions—as a condition for receiving program funds. These types of reforms can diminish a leader’s capacity to redistribute wealth, which ultimately increases the risk of a coup. More specifically, when a leader begins the implementation of an IMF arrangement, the leader’s action provides public information about the leader’s weakened ability to redistribute wealth in the future. Thus, the act of implementing an IMF program provides each individual elite with information about his or her expected value of rents in the future, and this information gives elites who stand to be harmed by a reform an incentive to launch a coup.