The Independent Evaluation Office (IEO) of the International Monetary Fund (IMF) published an important piece of work last week. Its report, ‘IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004-07,’ is not the catchiest of titles, but it contains some scathing criticism of one of the key global economic organisations. The report identifies several key areas where the IMF was either badly run, poorly staffed and working to inaccurate economic models.

The IMF is not the only organisation which got things hopelessly wrong in the gestation period prior to the worst global financial crisis since the 1930s, of course. But as one of the twin pillars of authority over the world’s economic affairs, along with the World Bank, the IMF is an important part of the Washington Consensus. This is a set of economic views that translates into neo-liberal policies advocated for advanced and emerging economies. The market-friendly prescriptions promoted by the IMF in the period 1980-2008 include cutting government budget deficits, supporting export-led growth and deregulating international trade.

In the aftermath of the financial crisis which led to a big build-up in government debt through bank bailouts and economic stimulus spending, the IMF has come in for increasing criticism. When Ireland’s debt problems became unmanageable, the EU and IMF offered financial support, with conditions naturally. Among these were a continuation of the rises in taxation and cuts in public expenditure that the Irish government has already begun. The Jubilee Debt Campaign has urged the Irish people not to give in to the kind of severe austerity programme that the IMF has imposed in other countries such as the Philippines, Pakistan, Jamaica and Romania.

Meanwhile, of course, other countries which do not face the kind of constraints under which Ireland and other Eurozone states operate, are putting in pace the IMF’s fiscal austerity policies anyway. In the UK, the Institute for Fiscal Studies calculates that government spending will be cut (see page 3 of this PDF) by £68bn and taxation  increased by £17bn by 2014-15. This week in the US, President Obama has announced public spending cuts of $1.1tn. It seems that the Washington Consensus is alive and kicking, which may be more than can be said for these economies after this fiscal action.

So if the neo-liberal agenda is flourishing, does this mean all is now well with the IMF? The organisation was established in 1947 to sort out the problems of protectionism and competitive currency devaluation that emerged before WW2. The IMF operated within a system of fixed exchange rates to promote world trade and act as lender of last resort to countries facing short term balance of payments. When the fixed exchange rate system collapsed in 1971, the IMF morphed into supervising policies and problems in its member countries.

In this regard it seems the IMF is weakened by its own deficiencies. The IEO report finds that the IMF does not give adequate consideration of “dissenting views”. There is little incentive to “raise contrarian views”. It fails to “integrate macroeconomic and financial sector issues”. It also suffers from a “silo mentality and insular culture”. Some observers, have heard these criticisms of the IMF before. The IEO reported in 2004 on the accuracy of the economic forecasts used by the IMF in some 175 of its support programmes. Long-time critics of the institution report that on that occasion the IEO found that: “there is ample evidence that IMF projections, as with other macroeconomic projections, are quite inaccurate”.

At a time when the authority of the IMF is under such attack, you might be forgiven for wondering why the US and UK are following its prescriptions quite so slavishly. That is, unless there is another reason for making sure that the general public suffers for the financial and economic failings of the IMF.