Abstract

The International Monetary Fund (IMF) treats its members very differently; some of the countries that borrow from the Fund receive huge loans while others in similar circumstances receive smaller loans. In this article, I argue that the difference in treatment is determined largely by domestic political conflict in the IMF’s most powerful member-states. My contention is that the IMF offers governments bigger loans when interest groups in the G-5 (the United States, United Kingdom, France, Germany, and Japan) pressure their governments into achieving this outcome. While domestic political processes in the G-5 drive government policy towards the IMF, governments must also bargain with one another on the international stage if they are to influence IMF policy. With few exceptions, most previous research has tended to ‘black box’ the intergovernmental aspect of this process. In this article, I set out and test a novel explanation of how governments arrive at collective decisions through a system of logrolling. By illustrating the sources of variation in IMF lending, this article contributes to our understanding of power and decision-making in international organizations. Moreover, it also provides an insight into the causes of the recent surge in the IMF’s lending activity since the onset of the global financial crisis.