The influence of the International Monetary Fund and the World Bank on Romania’s sovereign debt, 1967-1989

Addressing a historiographical gap, this article discusses the influence of the International Monetary Fund (IMF) and the World Bank (WB) on the evolution of Romania’s foreign debt, between 1967 and 1989. Based on Romanian, IMF and WB archive sources, it argues that this influence can be observed not only after Romania’s accession, but also before its membership. The article identifies three main tools of IMF and WB influence on Romania’s foreign debt-related attitudes and actions: persuasive diplomacy, financial assistance and economic coercion. Persuasive diplomacy took momentum in 1967, urged Romania’s admission into the IMF and the WB (in 1972) and encouraged the country – both pre- and post-accession – to borrow. Romania’s membership then favoured debt accumulation in two main ways, by giving it access to IMF and WB financial assistance and by encouraging lending from other creditors. During the 1980s crisis, the IMF conditioned its assistance by economic demands that were perceived in Bucharest as foreign pressures. Romania responded with an anti-coercive policy designed to reinforce its sovereignty; the reimbursement of debt in full and ahead of schedule was its main way of getting rid of the creditors’ perceived coercive influence.