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IMF Staff Papers Logo last updated: January 2002
Volume 48, Number 3
 
Northwest of Suez: The 1956 Crisis and the IMF
James Boughton

Full Text of this Article (PDF 107K)

Abstract: Egypt's nationalization of the Suez Canal in 1956 and the failed attempt by France, Israel, and the United Kingdom to retake it by force constituted a serious political crisis with significant economic consequences. For the United Kingdom, it engendered a financial crisis as well. That all four of the combatants sought and obtained IMF financial assistance was highly unusual for the time and had a profound effect on the development of the IMF. This case study illustrates the complexities in isolating the current account as the basis for determining a balance of payments "need" and shows that the speculative attack on sterling—and the IMF's response to it—were remarkably similar to financial crises in the 1990s. [JEL F33, F34, N20]

2001 International Monetary Fund