Cutting trees to balance budgets: International Monetary Fund programs are associated with increased deforestation

International financial institutions are increasingly expected to support environmental and climate goals. Among them, the International Monetary Fund (IMF) plays a central role in shaping economic policy across much of the Global South through its lending programs. However, little systematic evidence exists of the environmental consequences of these programs, including their potential effects on deforestation. Here, we show that the IMF rarely targets forest management: only 34 of 35,915 conditions administered to low- and middle-income countries in the last four decades pertain explicitly to forest management. We further show that IMF programs are associated with a 9.2% increase in annual tree cover loss between 2000 and 2020. These effects are driven by fiscal and external sector reforms, suggesting that IMF borrowers seek to consolidate fiscal spending, potentially on environmental protection, and extract economic value from natural resources. Our findings indicate that understanding national environmental outcomes requires greater attention to international determinants.