ABSTRACT
The case of Britain illustrates in vivid colors the capability of both the International Monetary Fund (IMF) and certain borrowers to bargain over terms of lending. Prime Minister Callaghan was caught between the urgent need to adjust Britain's imbalanced international economic position and the desire to retain the support of all elements of the British Labour party. Although the United States stayed aloof from the talks between Britain and the IMF, at various junctures it provided encouragement to Alan Whittome and the IMF mission. Alan Whittome, the mission chief, had served in Britain's banking system prior to working at the Fund and David Finch is widely respected as the current head of Exchange and Trade Relations Department. According to IMF staff, the Fund estimated targets it considered adequate to remedy Britain's ills, and then deliberately adjusted its figures away from the current British positions by ten percent.
