Japan’s Rescue of the IMF

Carin L. Holroyd and Bessma Momani

Social Science Japan Journal, 2012, vol. 15, issue 2, 201-218

Abstract: When the 2008–2009 economic crisis hit, countries that had long dominated the International Monetary Fund (IMF) found themselves both the source of the financial problem and unable to provide financial assistance to major global governance organisations. With only US $200 billion available to assist a list of ailing countries, the International Monetary Fund found itself in difficulty. To the surprise of many observers, Japan made a bold commitment to lend $100 billion to the IMF. The Japanese loan encouraged other countries to contribute and greatly stabilised the world’s economic situation. This paper explains why Japan provided the IMF with $100 billion in financing, despite both Japan’s once tumultuous relationship with the IMF and its previous demands for enhanced political power at the IMF as a condition of providing financing. This article finds that Japanese officials wanted to demonstrate global responsibility and saw Japan’s financial contributions as having low domestic political costs, and that Japan wanted to launder its preferences for debtor reforms through the IMF.

Date: 2012
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