What are IMF bailouts? How do they work?

IMF bailouts are funds and finances extended to nations in crisis by the International Monetary Fund (IMF). Detailing a bit about the IMF, its website says that it is a global organization that works to achieve sustainable growth and prosperity for all of its 191 member countries. It does so by supporting economic policies that promote financial stability and monetary cooperation, which are essential to increase productivity, job creation, and economic well-being. The IMF is governed by and accountable to its member countries.

Worth noting that the IMF was founded in the year 1944 following the Great Depression of the 1930s.

IMF bailouts explained 

Primarily, the international body offers financial assistance to countries hit by crisis, enabling them to create a breathing space while they resort to policy adjustments for restoring economic stability as well as growth

In addition, the IMF also extends precautionary lending for preventing and insuring against crisis. 

Crisis situations when IMF offers bailouts

These crisis situations can be varied and complex too and may arise from either domestic, external or both factors in some of the cases. As the website of IMF mentions, countries that approach IMF confront a host of crisis situations as challenges in one sector grip the economy at large.

IMF Lending at a glance

As of May 2, 2025, the organisation’s commitment approved amounts to USD 26.6 billion while the disbursement is at USD 26.6 billion. (The figures are calendar year-to-date.

How IMF lending works or helps?

Primarily, the IMF lending or bailout gives nations in crisis the leeway to plan and realign their policies for sustainable growth. These policy adjustments though will depend on the country’s situation. Say for instance the country facing acute capital outflow will need to restore and boost investor confidence.

Similarly, in a situation when the country is facing a balance of payments (BoP) crisis, without the timely financial lending by IMF, the country would need to make drastic economic adjustments which could be detrimental for its economy.

Importantly, the IMF lending is also accompanies by a number of corrective policy actions.

Major IMF bailouts in its history

$57 billion bailout approved for Argentina in 2018. This remains the biggest IMF arrangement both in terms of the amount committed as well as the financial crisis it aimed to tackle.

Greece received two bail-outs backed by the IMF for mitigating severe debt crisis.

South Korea received a rescue package worth $57 billion at the time of Asian Financial crisis.

Why does the IMF takes the spotlight?

IMF comes to the forefront as amid the escalating India-Pakistan war, the IMF has lately approved a substantial package for economically distressed Pakistan. On May 9, the Executive Board of the IMF sanctioned the disbursement of around $2.4 billon to the country as part of two programs.