track records that faced temporary setbacks. But the primary functionof the IMF, regardless of a country’s past economic performance, is toaddress
the balance of payments difficulties that a country cannot overcome by its own means.
If every other option is exhausted, thecountry is forced to approach the IMF, which is perceived to be theonly lender that can grant the necessary funding without the privatesector’s prerequisite of having internationally-accepted collateral.During the Asian Finance Crisis, the countries of Indonesia, Thailand, Philippines, and eventually, South Korea received IMF aid tooffset the collective shock that impacted the South East Asian region. The use of IMF funds was tied to the fulfillment of specific conditionsthat “consisted of macroeconomic variables and structural measuresthat were within the Fund’s core areas of responsibility.” (Guidelineson Conditionality pg. 2) These conditions included:“requirements that recipient governments end the kinds of collusive practices that have brought about the current crisis, andwhich have the effect of giving special advantages to favored domesticproducers and monopolies, and
open up their economies to foreigntrade and investment.
These are over and above more basicrequirements to put their banking and financial systems in betterorder, achieve budget surpluses, and-somewhat contradictorily-
reducetheir trade deficits
.” (Cronin)In the given case of the Asian Financial Crisis, the issue of conditionality became a major point of contention between Japan andthe United States because the two economic powers held differentunderstandings as to the nature of the crisis and conflicting interests