Low-income countries are highly vulnerable to exogenous shocks such as sudden drops in the prices of their exports, hurricanes, droughts, shortfalls in aid flows, and volatile private capital flows. Rich countries and global financial institutions recognise the need to avoid or mitigate the effects of these shocks to poor countries, but they only see a limited role for themselves. Poor countries, on the other hand, stress that the international community should do more.

Protecting the Poor: Global Financial Institutions and the Vulnerability of Low-Income Countries brings together in-depth analyses and valuable policy proposals of both officials and critical observers. It spells out what poor countries, rich countries and the international financial institutions can do to address the vulnerabilities of low-income countries.

Contributing authors advocate improvements in the governance of the international financial system which go beyond the short-term agenda of policymakers – such as the latest financial crisis or the newest debt relief proposal. “Fundamental” reforms are needed, they say. Contributors also review the role of the IMF in low-income countries. Some of them see the design of proper “exit strategies” as one of the main future challenges of the IMF, whereas others stress the need for the Fund to recast itself in the role of partner in development rather than macroeconomic master.