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Conditionality

News

Slimmer IMF but fatter Bank

18 June 2001

The IMF‘s efforts to streamline itself are likely to make little difference to countries implementing Bank and IMF programmes. Whilst the IMF is committed to withdrawing from areas in which it does not have expertise, it is assumed that the Bank will fill the space. Thus the overall scope and breadth of conditionality will remain the same. Moreover where the Bank is unable to deliver the required input in time, the IMF will continue to impose structural conditionality. It it hoped that mechanisms such as the PRSP, PRSC and PRGF will help to align and coordinate IMF and Bank programmes and make streamlining effective. However, these mechanisms do not yet exist for middle-income borrowers.

The IMF‘s conditionality review papers pay no attention to the policy content. This oversight is particularly significant given the IMF‘s new stated focus on poverty. An internal review carried out in 1997 showed that its adjustment programmes in the poorest countries had not achieved the priority objectives of balance of payments stability and growth, whilst indebtedness, inequality and poverty increased in African countries. Yet the same policies are being applied to achieve poverty reduction goals without any assessment of why they failed before and how they will achieve their goals this time.

The comments period on the conditionality review has been extended to 30th June. Submissions will be made public and staff are preparing a paper in responce; this will likely be made public in August. Two seminars are planned for London and Tokyo in July.

Send comments to: conditionality@imf.org