Globalizing Neoliberalism: The IMF, the Paris Club, and the Political Economy of Sovereign Default in Africa after 1982

This article revisits the globalization of the International Monetary Fund’s deeply unpopular structural adjustment programs over the course of the 1980s and 1990s. It highlights the financial leverage behind these programs as it crystallized in the unofficial meetings of Western finance officials in the so-called Paris Club of official creditors. Albeit little known, the Paris Club was responsible for two-thirds of the world’s 600 sovereign debt restructurings between 1950 and 2010. In investigating the inner workings of the Paris Club, this article seeks to reconceptualize the structural adjustment program from its well-known guise as a set of traumatic policy adjustments designed to restructure a national economy, to its more fundamental function as a signal of creditworthiness. Without the presence of a structural adjustment program designed by the International Monetary Fund, an array of powerful creditors including the Paris Club would discontinue their financial relations, effectively pushing a debt-distressed country into default. To debtor countries, the structural adjustment program came to function as a precondition for normalized relations with many other creditors, without which the financial arteries connecting it to global markets could get cut off. To illustrate the International Monetary Fund program’s vital function in the political economy of sovereign default, the article proceeds from a new database of Paris Club agreements to analyze a procession of African sovereign debt renegotiations in the wake of the 1982 global debt crisis. Offering new oral history testimony from participants and other stakeholders in Paris Club meetings, the article exposes the tight entwinement of the International Monetary Fund and the Paris Club’s operations. It makes the case that the Paris Club’s latent power to trigger sovereign default—and effectively ostracize a country from global markets—contributed significantly to the global spread of the International Monetary Fund’s reform programs.