THE IMF, CHINA AND CONDITIONALITY

Abstract: This research is an attempt to critically examine the impact that China’s aid program has had upon IMF conditionality. By building upon the work of Diego Hernandez (2017) who found that with every 1% increase in Chinese aid, the World Bank typically lessens its conditions for market liberalisation and economic transparency by 15%, this paper looks at the background surrounding China’s rise to become an aid super power, the background of aid conditionality, and the IMF. The paper approaches the issue through the frame of Realism, and Politically Motivated Aid. By setting up a hypothesis and two research questions, the paper seeks to prove the hypothesis by looking at the example of Ethiopia and using it as a longitudinal case study. The number of conditions placed upon Ethiopia by the IMF are examined in two periods of time, before and after 2003, when there was a turning point in China-Ethiopia relations. By looking at this issue through the lens of these two theories, this research acts to both test the theories in the light of aid conditionality and seeks to uncover more information about how the IMF’s conditional approach operates, when threatened by Chinese influence. In the analysis of the paper, the conditions are sorted into 8 different categories. These categories are then individually examined in the time periods. After that, a document analysis is conducted to examine whether the IMF reported plan for development in Ethiopia, matches the conditions applied to the state. Alternate scenarios for what might explain what’s going on are also examined, and future research is proposed which would shine a light upon the motivation and drivers of the IMF when conditions are dropped. The findings of this analysis point out a massive contradiction in what conditions the IMF places, compared to what the IMF’s stated development recommendations for Ethiopia are