The Mutual Conditionality of International Financial Institutions: Iraq after 2003 as a Model

Abstract

International financial institutions and the loans and credit facilities they provide to countries of the Global South have become a significant point of attraction and influence for major powers. This study therefore examines, in a systematic academic manner, the nature of the mutual conditionality imposed by international financial institutions on countries receiving grants, loans, and credit facilities. Through the International Monetary Fund and the World Bank, these institutions have adopted a range of economic measures. The IMF has emphasized the implementation of economic stabilization policies based on fiscal and monetary reform through packages of conditions required from borrowing countries to complete economic reform. The World Bank, in turn, initially focused on reconstruction and development through productive investment and the encouragement of foreign investment, before later adopting structural adjustment programs. This shift created a more integrated and effective relationship between the IMF and the World Bank, whereby borrowing from one institution often requires compliance with the conditions and procedures of the other.