This Action Aid Policy Brief discusses whether, after two and a half years of 'the Policy Support Instrument (PSI)', there is any evidence that the IMF has used its signaling power to support the 'mature stabilisers' to move from perpetual belt-tightening to long term development and growth. The paper reviews all five PSI agreements that have so far been signed and looked in detail at two of them, in Uganda and Mozambique. The paper finds that PSIs often recommend even stricter inflation targets than their predecessors, despite the progress the IMF has acknowledged, and despite the substantial concern that low inflation targets are inhibiting growth and development.

November 28, 2007.