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An Analysis Of Imf Conditionality

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  • Ariel BUIRA

Abstract

IMF conditionality was introduced in the 1950s as a means to restore members´ balance-of-payments viability, to ensure that Fund resources would not be wasted and to ensure that the institution would be able to recover the loans it extended to member countries. For several decades, until the early eighties, Fund Conditionality centred on the monetary, fiscal and exchange policies of members. Over the last 20 years, while the resources of the Fund declined as a proportion of world trade, the number of Fund programmes increased steadily, and conditionality underwent substantial changes, expanding the scope of conditionality into fields that previously had been largely outside its purview. As the number of conditions increased, the rate of member country´s compliance with Fund supported programmes declined, and reviewing and streamlining conditionality became inevitable. Experience and the Fund´s own studies show that programme success is closely related to ownership, and that ownership cannot be externally imposed. It must result from internal analysis and discussion, leading to the conviction by domestic actors that compliance with the programme is conducive to the attainment of their own objectives. Conditionality can neither substitute nor offset a lack of ownership. This paper reviews the origins and purpose of conditionality, as well as its nature and evolution over time. It looks into the reasons for increased conditionality during the 1980s and 1990s and reviews the recent IMF debate on conditionality and on the proposed changes in Fund practices. It distinguishes between short-term imbalances that result from excess demand and structural disequilibria and the new type of financial crises associated with short-term capital movements, asking whether different problems call for different conditionality. The paper also discusses how the economic and social costs of adjustment may be minimized and whether Fund resources are sufficient to enable it to comply with its mandate.

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  • Ariel BUIRA, 2003. "An Analysis Of Imf Conditionality," G-24 Discussion Papers 22, United Nations Conference on Trade and Development.
  • Handle: RePEc:unc:g24pap:22
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    Cited by:

    1. Yýlmaz Akyüz, "undated". "Global Rules and Markets: Constraints over Policy Autonomy in Developing Countries," Working Papers 2007/5, Turkish Economic Association.
    2. Calliope Spanou, 2016. "Policy conditionality, structural adjustment and the domestic policy system. Conceptual framework and research agenda," RSCAS Working Papers 2016/60, European University Institute.
    3. Stubbs, Thomas H. & Kentikelenis, Alexander E. & King, Lawrence P., 2016. "Catalyzing Aid? The IMF and Donor Behavior in Aid Allocation," World Development, Elsevier, vol. 78(C), pages 511-528.
    4. Stephen Browne, 2010. "Aid to Fragile States: Do Donors Help or Hinder?," Working Papers id:2979, eSocialSciences.
    5. Mr. Roger P. Kronenberg & Alessandro Giustiniani, 2005. "Financial Sector Conditionality: Is Tougher Better?," IMF Working Papers 2005/230, International Monetary Fund.
    6. Ruxanda Berlinschi, 2010. "Reputation concerns in aid conditionality," The Review of International Organizations, Springer, vol. 5(4), pages 433-459, December.
    7. Witold J. Henisz & Bennet A. Zelner & Mauro F. Guillen, 2004. "International Coercion, Emulation and Policy Diffusion: Market-Oriented Infrastructure Reforms, 1977-1999," William Davidson Institute Working Papers Series 2004-713, William Davidson Institute at the University of Michigan.
    8. Arjan de Haan & Ward Warmerdam, 2012. "The politics of aid revisited: a review of evidence on state capacity and elite commitment," Global Development Institute Working Paper Series esid-007-12, GDI, The University of Manchester.
    9. Stephen Browne, 2007. "Aid to Fragile States: Do Donors Help or Hinder?," WIDER Working Paper Series DP2007-01, World Institute for Development Economic Research (UNU-WIDER).
    10. Richard Kozul-Wright & Paul Rayment, 2004. "Globalization Reloaded: An Unctad Perspective," UNCTAD Discussion Papers 167, United Nations Conference on Trade and Development.
    11. Omotunde E.G. JOHNSON, 2005. "Country Ownership Of Reform Programmes And The Implications For Conditionality," G-24 Discussion Papers 35, United Nations Conference on Trade and Development.
    12. Farhad Noorbakhsh & Alberto Paloni, 2007. "Learning from structural adjustment: why selectivity may not be the key to successful programmes in Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(7), pages 927-948.
    13. Committeri, Marco & L´Hotellerie-Fallois, Pilar & Algarra, Monica & Balteanu, Irina & Eijking, Carlijn & Estefanía, Julia & Gallego, Sonsoles & Garelli, Serena & Gibson, Heather & Heinbuecher, Robert , 2019. "Conditionality and design of IMF-supported programmes," Occasional Paper Series 235, European Central Bank.
    14. Alfredo Saad-Filho, 2007. "Life beyond the Washington Consensus: An Introduction to Pro-poor Macroeconomic Policies," Review of Political Economy, Taylor & Francis Journals, vol. 19(4), pages 513-537.
    15. Qerimi, Qerim & Sergi, Bruno S., 2021. "Let's lessen conditionality in times of force majeure events. The archaic righteousness of the policy of conditionality of international Institutions amid COVID-19," Research in International Business and Finance, Elsevier, vol. 58(C).
    16. Bhumika Muchhala, 2022. "The Structural Power of the State-Finance Nexus: Systemic Delinking for the Right to Development," Development, Palgrave Macmillan;Society for International Deveopment, vol. 65(2), pages 124-135, December.

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