IMF loans are deeply political. One of the most debated aspects of its programs concerns conditionalities: structural reforms and macroeconomic policies imposed in exchange for financing. These measures largely originated in programs applied in Latin America and have had very different economic and social consequences depending on the country and context. Since the 1990s, these conditionalities have led the IMF to be labeled as an “agent of neoliberalism” (Reinsberg et al., 2023). Today, with 191 member countries, the Fund maintains that its mission is to promote financial stability and international monetary cooperation.
Originally, the IMF was created to support countries, mainly in Europe, facing temporary balance-of-payments problems in the post-World War II context. However, its focus shifted over time. During the debt crisis of the 1980s, numerous Latin American countries faced severe economic difficulties and turned to the IMF for assistance. Following the management of the 1982 Mexican crisis, the organization established a protocol requiring countries to accept certain structural adjustments in order to access financing, thus institutionalizing conditionalities as a central component of its assistance programs. But why do some programs come with many conditionalities while others have few?
The literature points to several explanatory factors. One of them is a classic variable in political science that has been widely studied: regime type, which has also received considerable attention in the political economy literature. In consolidated democracies, for example, labor forces are better represented, which limits public-sector wage cuts and, therefore, reduces the scope for structural adjustments promoted by the IMF. Moreover, under IMF programs, foreign direct investment tends to increase in democracies and decrease in autocracies. Domestically, politicians in democratic regimes, motivated by re-election concerns, seek to avoid the short-term economic and social costs associated with IMF programs. Consequently, countries with higher levels of liberal democracy would be expected to face fewer conditionalities.
However, recent contributions suggest a positive relationship between the number of conditionalities and the level of liberal democracy, which may seem counterintuitive. A possible explanation is that, given the unpopularity of IMF programs in the region, where they are often seen as an expression of “Western imperialism” (Doyle, 2011), democratic governments face stronger domestic opposition by organized social groups. In this context, the Fund may impose more conditionalities to ensure the achievement of agreed objectives and maintain control over program implementation.
Another commonly studied variable is alignment with U.S. foreign policy. Several authors argue that Washington exerts strong influence over international financial institutions headquartered in its capital. A common indicator used to measure such alignment is voting in the United Nations General Assembly: countries that vote more consistently with the U.S. tend to receive more favorable treatment from multilateral institutions. The literature suggests that lower alignment is associated with a greater number of conditionalities in Latin American countries. The overall decrease in voting coincidence between Latin American countries and the United States between 1980 and 2019 could help explain the observed increase in conditionalities during that period.
Finally, there is also literature on the relationship between government ideology and the IMF. It is suggested that left-wing governments tend to be more reluctant to accept IMF demands, whereas right-wing governments are more likely to comply. Since the IMF is particularly unpopular among left-leaning sectors in Latin America, such governments, aware of electoral costs, are likely to avoid committing to privatization or structural adjustment measures. However, the literature lacks significant evidence on whether government ideology affects the number of conditionalities imposed in programs with Latin American countries.
The literature in this field continues to grow. It is important to note that, although there are several quantitative studies on conditionalities, the results do not necessarily reflect their intensity or level of enforcement. For example, although Argentina is one of the most problematic countries in its relationship with the IMF, it has not accumulated the highest total number of conditionalities in the region since the 1980s, ranking only sixth. Qualitative analysis could better assess the actual stringency or impact of each measure imposed. Therefore, qualitative research and case studies are needed to deepen and complete the analysis.
Finally, future studies could incorporate new explanatory factors as the global order is rapidly changing. Classic political science variables such as regime type, government ideology, and alignment with the United States are no longer sufficient to explain contemporary phenomena. Among emerging avenues, the growing influence of China in Latin America stands out. Few studies have addressed how Chinese investment affects U.S.-based financial institutions. Analyzing how China’s presence influences the IMF’s willingness to impose conditionalities would be a promising line of research for understanding the evolution of the global financial order in the 21st century.