If this reduction in the amount of credit granted were to prove permanent, there would be no alternative to drastically scaling back the Fund’s financial function. “Surveillance” itself would have to be reformed, since the IMF’s influence over member countries derives in part from its role as potential supplier of finance.
The diminution in the Fund’s lending is the result of both structural and cyclical factors. The structural factors include the prevalence of flexible exchange rate regimes, the improved quality of members’ economic policies and the ability of the private financial markets to satisfy the demand for credit. However, an end to the present positive phase cannot be ruled out.