Does extensive IMF conditionality promote or hinder economic reforms? We find the effects depend critically on domestic partisan politics. Our research using post-communist countries' data from 1994 to 2010 shows:
Under left-wing governments, more stringent conditions push through ambitious reforms despite right-wing opposition.
Under right-wing governments, increased demands lead to greater resistance from the political left and limit reform implementation via compromise or concessions.
These seemingly paradoxical outcomes are robust even after addressing endogeneity with instrumental variables analysis.
Our findings highlight how IMF policy prescriptions interact with domestic political dynamics in complex ways.
