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The Emergence of the Washington Consensus

The Emergence of the Washington Consensus

Chapter:
(p.126) Chapter Five The Emergence of the Washington Consensus
Source:
Behind the Development Banks
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226033679.003.0006

This chapter shows that beginning in 1986, the United States would promote program lending with a vengeance. The James Baker Plan marked two important turning points in U.S. policies toward the multilateral development banks (MDBs), both of which would have durable long-term effects. The first was that the United States began to actively promote policy-based lending as one of the MDBs' core activities. The second was the dawn of a new era in shareholder activism. The Baker Plan unambiguously endorsed expanding the MDBs' capacity for policy-based lending. The Plan promised the Bank more resources in exchange for an enhanced emphasis on policy reform. Baker's successor, Nicholas Brady, proposed a new plan that allowed for a measure of debt relief and was more successful. From the Baker Plan until the present day, the Treasury has regularly reported using donor leverage to promote particular policies within the banks.

Keywords:   program lending, United States, James Baker, Baker Plan, U.S. policies, Nicholas Brady, Treasury

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