by Ommey Nahida
As of October 2025, 86 countries were indebted to the International Monetary Fund (IMF) – that’s nearly half of the world and includes 18 out of the 26 poorest countries. As the IMF functions as a lender of last resort to governments facing balance of payment problems, these figures reflect a global debt crisis and the high price countries are still paying for the Covid-19 pandemic and the intersecting crises that followed. It is also indicative of the central role the IMF continues to play in shaping the world’s economic policy infrastructure. Its main tool for doing so is the policy conditionality that accompanies most of its lending programmes. This year, the IMF will be reviewing its programme design and conditionality, known as the Review of Conditionality (RoC), as well as the policy advice it provides to all countries every year in its Review of Surveillance. Together, these reviews will shape the institution’s day-to-day work in the global South for the next five to ten years – so it’s worth taking a closer look at what could be gained – or lost – and what it tells us about the power of the IMF in shaping global economic decision-making.
IMF conditionality remains tool of neocolonialism
IMF policy conditionality has been controversial for decades. Its use throughout the 80s and 90s in Structural Adjustment Programmes (SAPs) was widely understood to be a primary tool of neocolonialism through which the global North-controlled institution imposed neoliberal policy prescriptions that kept the global South in perpetual debt servitude. In response to the significant backlash of anti-globalisation movements, throughout the 2000s the IMF rebranded its SAPs and made significant efforts to show its ‘softer, kinder face’. Along with those efforts came the insistence by the IMF that loan programmes should be country-led and that loan programmes are only effective if country authorities genuinely design, endorse and commit to implementing reforms, described as so-called ‘ownership’.
But to what extent has the global South been able to truly chart its own economic policy course, or has this all been window dressing?
Today, a loan programme is initiated when a government issues the IMF with a ‘Letter of Intent’ that details the policy reforms it plans to undertake to address its balance of payment problem. This letter serves as the basis for negotiations about the policy conditions attached to a loan – and is core to the concept of ownership. Yet, it is an open secret that in most cases, letters of intent are drafted entirely by IMF staff. And even in cases where that hasn’t taken place, playing ‘guess the magic words to get an IMF loan approved’ is not particularly difficult. Governments around the world know that if they hit the right familiar combination of ‘fiscal consolidation’, ‘increasing VAT’, ‘restricting the public wage bill’, ‘subsidy removal’, targeting social protection’ and ‘reforming public enterprises’, they will win IMF BINGO. Ownership of IMF programmes therefore still seems closer to Hobson’s Choice, whereby governments facing debt crises with nowhere else to turn (because there is still no sovereign debt workout mechanism) are faced with a very limited menu of policy conditions they must choose from. The rest is just going through the motions. And even within the confines of this narrow approach, the last RoC in 2018 identified a weakening of ownership as program completion rates had deteriorated.
If the options that countries facing debt crises haven’t significantly changed, perhaps IMF governance better reflects the global economy of today and is no longer dominated by the post-WWII US/European arrangement? Alas. At the height of SAPs in 1987, the US controlled about 16% of IMF vote shares – the same as it does today. The largest European economies and former colonial powers still hold over 20% of the vote share today, while sub-Saharan Africa still controls only about 5% of the vote share, despite hosting about one-fifth of humanity. The UK alone holds a larger vote share than all of its former sub-Saharan African colonies combined. While some major emerging economies have seen modest increases in their voting powers, these still lag far behind those of the global North. So, in essence, the IMF’s model still operates on the basic premise that Southern governments with little to no viable alternatives accept policy conditions prescribed by an institution that overwhelmingly represents the interests of the global North, fundamentally eroding their sovereignty and the ability of communities to influence the policies that shape their daily lives.
Of course, these power dynamics are complex in reality and vary country-to-country. It is not only a question of the big bad North imposing its self-serving policies on a defenseless global South. Plenty of Southern government officials are all too happy to implement neoliberal policy formulas that enrich local elites while pointing their finger at the Fund when faced with public discontent, while IMF officials point the finger right back at governments they claim are not interested in implementing progressive policies and require anti-corruption reforms. Amidst all this finger pointing, communities at the sharp end of austerity policies continue to lose out.
Opportunities of the 2026 Reviews
Short of a comprehensive review of the IMF’s governance structures that 44 of the world’s poorest countries called for last year, the IMF could ameliorate these ‘ownership’ deficits in its upcoming RoC by broadening its programme development process, involving a much wider set of stakeholders, such as parliamentarians for starters, in support of a national dialogue on reform commitments, as recommended by the ILO and others for over a decade. Rather than investing further in advising governments on so-called ‘governance’ or anti-corruption reforms, the Fund should first address the way in which its own actions can undermine the policy space and democratic responsiveness of its members. The 2018 RoC seemed to go some way in acknowledging this, emphasizing stronger communication with the public as a lesson learned for enhancing ownership. The recently concluded BWI at 80 report placed the same emphasis on the need for actually realising country ownership, IMF governance reforms, and more meaningful engagement with domestic civil society. Yet, in developing its operational guidance on this, the Fund didn’t get it quite right. Rather than aiming to at least co-develop reforms with wider civil society communities, in its well-established paternalistic fashion, it advised governments to develop robust communication strategies to effectively sell their pre-agreed reforms to the public after the fact. In doing so, the problem that the IMF identifies is that the silly public just doesn’t understand why austerity measures are necessary, rather than take a minute to consider that maybe, the Fund should actually listen to communities and adjust its macroeconomic frameworks and debt sustainability assessments to allow for more critical public spending. It’s therefore unsurprising that, in the period following the 2018 RoC, we saw more unfulfilled IMF policy conditions in the face of significant public backlash, including in Pakistan, Argentina and Bangladesh. Most notable were the deadly Gen Z protests in Kenya sparked by IMF conditionality on tax reforms, which led to the programme requiring renegotiation.
The commonly heard excuse, that there is no time to undertake broad consultations during the urgency of programme development, can no longer suffice now that the IMF is more aware than ever of the deep impacts its policy conditionality has on a country’s social fabric. If Northern governments are going to continue to issue policy conditionality through the IMF, at the very least, they have a moral and legal obligation to assess and communicate the anticipated impacts of a wide menu of potential reforms to inform a broad-based national dialogue, before conditions are agreed.
Yet, therein lies the rub. While the IMF has been expanding its toolkit for assessing distributional impacts of macroeconomic policy reforms for advanced and middle-income economies in response to long-standing calls for this, it hasn’t used these tools for those who need it most, low-income countries facing loan programme negotiations, finding themselves between a rock and a hard place who stand to benefit from better understanding how hard exactly that rock is going to be. At Christian Aid, we were unable to identify any distributional impact assessments of proposed economic reforms by the IMF in 12 low-income countries in which we work across Asia, Africa and the LAC region between 2023 and 2025.
IMF staff point to data gaps as the reason for this ‘uneven-handedness’ between their support for rich and poor countries, yet this remains unconvincing because the World Bank has been conducting, albeit more simplistic, poverty and social impact analysis of each of their policy conditions since at least the mid-2000s. The real reason behind this discrepancy lies with that old familiar paternalism again – the IMF already ‘knows’ that countries requiring loan programmes need to tighten their belts, so undertaking impact assessments that show marginalized communities will be hit hardest is not a useful exercise and may actually hamper ‘required’ reforms. In her recent response to the IMF’s Independent Evaluation Office’s review of IMF approaches to fiscal policy advice, which also recommended that the Fund better assesses distributional effects of fiscal measures, the Managing Director already tempered expectations as to what to expect from the upcoming reviews in this regard, warning that distributional impact assessment work will be subject to cost-benefit analysis, given their significant resource implications.
Unless the upcoming IMF reviews finally grapple with what UN special rapporteur Philip Alston aptly described as having ‘a large brain, an unhealthy ego and a tiny conscience’ by meaningfully listening to communities, practicing humility about the assumptions it makes and taking responsibility for the immense consequences of its actions, the institution will continue to undermine its credibility, erode Southern policy space, and serve as a tool for the dispossession of citizens' wealth at large and the accumulation of wealth by the few.
The author would like to thank Ian Bell for his research into IMF distributional assessment work between 2023 and 2025 that supported this post.
