Gallagher on the IMF Amid Changing Global Power
Pardee Professor and Global Development Policy (GDP) Center Director, Kevin P. Gallagher was interviewed by Bloomberg in a segment, “Can the World’s Economic Firefighter Adapt to the 21st Century?,” addressing the current state of the The International Monetary Fund (IMF) and criticism of its ability of appropriately provide aid when global powers have shifted.
Gallagher portrayed a global economy weakened by successive shocks, due to a succession of COVID-19, interest rate hikes, climate events, and now war, especially in emerging and developing countries. He stressed that many states were already far below their growth potential before the latest conflict-driven price spikes hit, and that this new shock is “sending a lot of countries back” from the trajectories they had before the pandemic.
Against this backdrop, he argues the IMF itself is in a kind of crisis: structurally important, but insufficiently reformed and underpowered for the scale of current problems, even as it continues to provide emergency financing.
Gallagher criticized how IMF governance and lending practices work. He notes that voting power does not reflect today’s economic realities as China, now the second-largest economy, still lacks corresponding influence because major shareholders like the US and Japan resist quota changes, creating “a little bit of a legitimacy issue”. Additionally, he argued that the countries receiving IMF programs have essentially no say in how those programs are designed, even though they bear the consequences.
He noted the fund has relied too heavily on austerity, even when crises are caused by external shocks rather than domestic mismanagement, deviating from the original idea of providing a temporary “shot in the arm” to help countries get back on their feet.
Looking forward, Gallagher calls for fundamental reform along three dimensions: the IMF must be larger, better, and more inclusive. “It’s not big enough,” he argued, warning that if all eligible poorer countries needed help simultaneously, the current monetary “firepower” would be quickly exhausted.
He defined “better” as programs that are tightly tailored to country circumstances, especially avoiding austerity conditionality when shocks are external and temporary. He added his want for recipient countries to have greater influence over program design, aligning governance with the reality that those most affected by IMF decisions currently have the least power inside the institution.
The full interview can be watched here.
Kevin P. Gallagher is a professor of Global Development Policy at the Frederick S. Pardee School of Global Studies at Boston University and the director of the Boston University Global Development Policy Center (GDP Center). He serves as the lead expert on Multilateral Development Bank Reform to the Brazilian Presidency of the G20. Additionally, he is a member of the Task Force on Climate, Development and the International Monetary Fund and a co-chair of the Debt Relief for a Green and Inclusive Recovery Project. Gallagher is the author or co-author of eight books, including China and the Global Economic Order (Cambridge University Press, 2025), The Case for a New Bretton Woods (Wiley, 2021), and The China Triangle: Latin America’s China Boom and the Fate of the Washington Consensus (Oxford University Press, 2016). To know more about his scholarly work and achievements, visit his faculty profile.