Mapping the IMF’s footprint in the MENA region

This paper is authored by Samriddhi Vij, ORF, New Delhi.

This brief examines the International Monetary Fund's (IMF) involvement across economies in the Middle East and North Africa (MENA) region. It finds that the IMF’s influence is determined not by its technical expertise but by the political economy of the states that are the subject of its engagements. Drawing on active IMF programmes, Article IV consultations, and regional surveillance exercises, the brief categorises MENA countries into four groups: structural borrowers; resilience partners; surveillance clients; and holdouts. It argues that domestic ownership of reform is the primary determinant of programme success, that national wealth is inversely correlated with IMF leverage, and that political vetoes consistently override technocratic authority. The coming years will require a more differentiated approach that recognises the heterogeneity of state capacity, political constraints, and geopolitical rents.

International Relations

In recent decades, the International Monetary Fund (IMF) has evolved from being a lender of last resort to a substantial presence in the economic architecture of the Middle East and North Africa (MENA) region: it maintains active surveillance, lending, staff visits or staff engagements with 18 of the 22 sovereign entities it classifies as MENA countries.

Most MENA countries are considered ‘rentier states’, or countries that derive large amounts of their government revenues from renting their indigenous resources to external agents. For decades, the social contract in Arab states has been predicated on the distribution of rents through bloated public sector employment and low taxation, in exchange for political consent. This structural rigidity means that when external rents (aid, remittances, and oil) decline, the state lacks the domestic tax base to compensate, transforming temporary liquidity crunches into chronic solvency crises. Additionally, the region is characterised by instability and conflict. The resultant issues of high youth unemployment rates and anaemic private sectors have become a feature of the regional system. Consequently, the IMF is no longer a temporary stabiliser but has become a relatively permanent substitute for a functioning fiscal state. This is further entrenched by the region’s geopolitical centrality, making it “too strategic to fail.” As such, the IMF is likely to be frequently compelled to provide “life support” to systems unable to reform, enabling a unique “stabilised stagnation.”

This paper can be accessed here.

(The views expressed are personal)

This paper is authored by Samriddhi Vij, ORF, New Delhi.