Why does the IMF insist on maintaining the privatization of state entities as a reform policy as a prerequisite for borrowing states?
Critics have emphasised that the Washington Consensus greatly exaggerated both the ease of implementing privatisation and the gains from privatisation (Cook 1997; Heald, 1992, cited in Cook and Kirkpatrick, 1995, 22). And the World Bank itself has found that efforts to encourage privatisation have been among the most disappointing of all structural adjustment policies (Helleiner, 1994). The Post-Washington Consensus recognises that privatisation was not well planned: “From today’s vantage point, the advocates of privatisation may have over-estimated the benefits and underestimated the costs" (Stiglitz, 1997a, 19). In Stiglitz’s view, most people at the time would have preferred to have proper regulatory systems and competition in place before privatisation but the reason it was pushed through was that “no-one knew how long the reform window would stay open” (ibid, 20). In this situation privatising without the appropriate prerequisites in place “seemed a reasonable gamble”.
It is well known at this point that the IMF privatization policy had a poor track record of success, yet it's still one of the keys conditional policy for countries to have access to IMF loans.
Allowing a modicum of policy autonomy while under IMF programs has been at the forefront of developing countries’ and observers’ criticisms for decades. Such concerns — and the poor record of IMF programs — sparked a period of widely advertised reforms to conditionality over the 2000s.
Which makes me wonder if the IMF ever publicly addressed this issue through a publication or whatever other means.
There is a mismatch between what the IMF says and what the IMF actually does. Available evidence provides little support for the organization’s fundamental-transformation rhetoric. Instead, we find that the scale of organizational change was both modest and short-lived.
At the core of the controversy are IMF-mandated structural reforms. Unlike common IMF macroeconomic conditions (e.g., requiring borrowing countries to balance their budgets or reduce public debt), these types of policy reforms directly target market-state relations in borrowing countries. For example, they mandate the privatization of public utilities or changing the competition framework. As a result, governments’ freedom to select policy instruments in dealing with crises is constrained.
Why is that?