The Role of the International Monetary Fund in managing the sovereign debt crises

ABSTRACT :

This article aimed to assess the effectiveness of the International Monssetary Fund's (IMF) role in managing the sovereign debt crises that worsened in the aftermath of the COVID-19 pandemic. The study adopted an analytical descriptive methodology to review the conceptual framework of sovereign debt, analyze the Fund's immediate response to the crisis, and evaluate the nature and impact of the conditionalities imposed by the Fund on borrowing countries.

The analysis revealed that the pandemic led to an unprecedented dual shock, necessitating large-scale government intervention and a sharp increase in public debt levels. The Fund responded by providing rapid emergency financing packages. However, the gradual shift towards structural reform programs and austerity conditionalities sparked widespread debate about their impact on comprehensive and sustainable economic recovery, particularly concerning social spending.

The article concluded that the Fund's interventions succeeded in achieving immediate financial stability but faced challenges in ensuring long-term debt sustainability and avoiding the negative effects of conditionalities on social justice and growth. The analysis was expanded to include an in-depth study of the evolution of conditionalities from a focus on transparency to a return to traditional structural reforms, supported by evidence from economic literature. The study recommends that the Fund adopt a more flexible framework that balances the requirements of financial stability with the need to protect social spending and promote inclusive recovery.