As revolutionary movements sweep the Arab world, the World Bank and the IMF have taken a lead in international economic engagement in the Middle East and North Africa region. But critics have warned of the dangers of locking transitional governments into long-term loans with economic conditionalities that may perpetuate the flawed development model that contributed to the crisis in the first place.
In early June the IMF announced a $3 billion loan to support Egypt’s economic programme for 2011-12, which the IMF praised as “a first step to laying the foundation for a more inclusive private sector-led economic growth”. The loan has yet to be officially approved by the IMF board and the conditions attached to it are still unknown. A week earlier, at a summit in France at the end of May, the G8 announced that multilateral development banks, including the World Bank, would provide over $20 billion from 2011 to 2013 to Tunisia and Egypt, which had their long-serving rulers overthrown earlier this year. This is on top of bilateral deals promised by the United States and by wealthy economies in the European Union and the Arab Gulf, which could amount to another $20 billion. However, it is not clear how much of the pledges are actually new nor how much are loans as opposed to grants. Just days before the summit the Bank had already announced up to $6 billion in loans for the two countries, although it was not clear if the money was part of the G8 pledge. This followed the launch in April of a $1 billion infrastructure fund for the Arab region – with a focus on regional projects and public-private partnerships – backed by the Bank and its private sector arm, the International Finance Corporation, along with the Islamic Development Bank.