IMF conditionality: imposition or ownership? The case of Egypt

Abstract

Since its establishment, the IMF has been subject to constant interest from both academic circles and the media. Of the three types of the IMF's functions (regulatory, consultative, and financial), the latter - particularly the provision of temporary balance of payments support in the upper tranches with high conditionality - appear to have gained most of this interest. The fundamental and controversial feature of the IMF's financial assistance is found in the concept of conditionality, which is the subject matter of this study. Critics often point out that IMF conditionality is imposed upon borrowing countries against their will. However, the IMF and its supporters have responded with the notion of ownership of IMF conditionality. This study focuses upon this controversy. The research investigates the controversial nature of IMF conditionality with a case study of Egypt. In particular, it deals with the issue of imposition-ownership. Unlike the two opposing schools which see the nature of IMF conditionality as a matter of either imposition or ownership, the study argues that IMF conditionality can involve both elements. In capturing such a perspective regarding the nature of IMF conditionality, the study utilises the notion of the linear spectrum, at the opposing ends of which the elements of imposition and ownership are located. Their relative degrees can be assessed through the negotiation process rather than focusing on either the initial position of the parties or the final outcome. The nature of IMF conditionality can be examined with the aid of the concept of power, which distinguishes between resources and application. The relative power of the party can, in turn, help determine the degree of imposition and ownership on the imposition-ownership spectrum. The study further suggests that relative degrees of power, and the consequent location on the imposition- ownership spectrum, are not static but may vary during the course of negotiations, or indeed between negotiations.