The International Monetary Fund (IMF) has long served as the primary “lender of last resort” in the international economy. However, IMF loans come with a number of strings attached, an approach formally called “conditionality”, which undermine the fiscal sovereignty of developing countries. The question then arises: why is the IMF still the primary international lending institution that developing countries approach? Furthermore, if these countries are choosing to go to the IMF, what impedes them in improving their bargaining position? This article will go on to identify factors that weaken the bargaining position of countries in the IMF while also maintaining its relevance. Finally, we will discuss how developing countries like Pakistan could approach IMF negotiations in the future in light of the economic ascendancy of China and rise of new organizations like the Asian Infrastructure Investment Bank (AIIB).
Team: Aly Rashid