While the IMF was successful in assisting nations to deal with the crisis of 2008–9, it could not (even if it had wanted to) stem the systemic changes that marked a turning point in the global economy. The post–Bretton Woods configuration of economic power has been turned upside down. The advanced economies are burdened with the cost of repairing the damage done by their financial institutions while their recoveries have stalled. The emerging market and developing countries emerged from the crisis relatively unscathed but can no longer count on exports to the United States to fuel their economic growth. This chapter reviews the challenges the IMF will face as its members deal with changes in their economic and political positions.

A tepid economic recovery left fiscal burdens in many advanced economies, and the effects of this legacy are explored in the first section. Ireland, Greece, and Portugal are saddled with large sovereign debt liabilities and have required assistance from the IMF and other European governments. The IMF faces the danger of being caught in a crossfire among the debtor governments, those that contributed to their relief, and its other members concerned about the Fund’s exposure to the European borrowers.