Presidential prerogatives, exogenous situations, and Sisyphean IMF loan arrangements: examining fiscal crises in post-Arab Spring Tunisia and Egypt

Abstract

Since the Arab Spring’s overthrow of leadership in Tunisia and Egypt in 2011, both states find themselves in severe fiscal crisis due to currency shortages, high external debt and inflation, despite loan arrangements from the International Monetary Fund (IMF). Why has a decade of IMF loan programmes been unable to offset these economic imbalances? This article assesses the financial situations in both state cases, outlines the processes and provisions of IMF loan programmes, looks to specific examples of application in post-Arab Spring Tunisia and Egypt, and then articulates whether domestic leadership, exogenous crises, or IMF conditionality arrangements best explain the inability of the IMF to address these fiscal issues. It concludes by placing most of the blame on conditionality of IMF loan programmes, which encourage austerity and increased debt rates, creating a ‘Sisyphean arrangement’ where both states remain continuously inclined to accept further loan programmes, without alternative for economic reform to offset debt. However, effects of domestic leadership actions and exogenous crises remain highly influential on the performance of state economies, illustrating that the IMF’s position as being able to solve most fiscal problems is inhibited by these factors as well.