New IMF Conditionality Guidelines


 

Publication Date: November 2002

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

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Abstract:

The International Monetary Fund (IMF) recently revised the guidelines for the design of conditionality in its loans. Conditionality requires a borrower country to adhere to various macroeconomic and other policy "conditions" when it borrows funds from the IMF. It is an inherent feature of all IMF lending. Four guiding principles are at the core of the revised IMF guidelines: national ownership of the reform program, parsimony and clarity in the application of program-related conditions, tailoring of programs to the member's circumstances, and effective coordination between the IMF and other multilateral institutions. This report provides background on the issues, summarizes the principles underlying the new guidelines, discuses the criticisms they respond to, and assesses their likely effectiveness. This report will not be updated.