Can you give us some examples where this IMF standad solution has worked?
It's a pretty dire record though. I think that it's easy to argue that where there have been positive results that's mostly by accident. The UK is the best example of this - there was an IMF rescue and liberalisation but also an oil discovery which recapitalised the commercial base of the country and allowed an infrastructure building program.
And all of that worked because we had a PM who was able to thread the needle and make it work without giving in to any political group.
It’s a very very small window, and the resulting growth was pent up demand being brought online.
And very painful.
Nobody talks of the pain in the immediate after math of the 1992 reforms. A huge section of people >40 years of age were crushed under computer based automation in factories and industries that followed. Several companies were shut down. Scores and scores of people lost jobs, and dumped into a labor market that had way high demands of productivity and skill they had to offer. This was with a huge number of both public sector and private sector companies. Heck even Bank employees suffered. All of a sudden a whole spectrum of jobs were just not needed(Accountants, Typists, Postmen etc etc)
Several families suffered quite bad. I was lucky that my dad was a driver, and those skills were reusable outside. But there were plenty of 'Supervisors' and other 'Desk job' people, who just got ruthlessly eliminated out of the economic scene.
Basically its not easy, for the existing population masses to face huge economic changes rapidly unfolding in months/decades.
The question is do you focus on the "real" economy or the spreadsheet? If you are able to devalue and take the increase of import costs and generate competitive advantage by adding more value at a lower cost then the possibility is that your real economy will grow. More activity will create more actual wealth, which will help your fiscal position and restore standards of living over time. There are a lot of dependencies there, but there is a possible out.
On the other hand you can do what happened in Greece, stand behind the currency, slash spending. The problem is that this cuts the real economy without improving competitiveness. The Greek solution (and IMF standard) is to liberalise, sell assets and introduce more market activity into controlled sectors. The problem with this is that you have to actually do it and not just talk (Greece largely hasn't) and also while sometimes it has worked it seems that the precondition for it working has to be that the sectors in question are healthy and straining at the leash... which is not the case in crisis economies in general.