Has the International Monetary fund changed its approach to conditionality attached to emergency loans? Iceland’s 2008-11 programme was the first in any advanced country since 1976. Compared with the earlier programmes implemented in emerging markets, the Icelandic package imposed less unilateral conditions, less immediate austerity, was more consultative with civil society groups and more supportive of capital controls. One reason for the differences with previous programmes was to do with Iceland’s specific political and economic conditions at the time of the crisis in September-October 2008, the Iceland factor. A second reason was an IMF factor and explains the motivation behind IMF´s keen interest in taking on the case of Iceland. The third reason was the “Nordic factor”, such that other Nordic governments were influential in shaping the IMF programme, including in shaping the IMF pressure on Iceland in the dispute over the failed Icelandic bank’s branches in the UK and Netherlands.
