IMF conditionality continues

8 May 2002

NGOs and trade unions charge that the IMF and World Bank are still imposing strict conditions on loans to borrowing countries. The Reality of Aid 2002, produced by a global coalition of NGOs, states that: “far from abandoning aid conditionality, international financial institutions and bilateral donors are collaborating in an unprecedented consensus to retool the aid regime under the rubric of ‘ownership’ and aid effectiveness”. This consensus includes:

  • a new set of IMF benchmarks, standards and codes;
  • selectivity – working with governments which have adopted the ‘right’ policies; and
  • aid disbursements linked to Poverty Reduction Strategy Papers

The report argues that PRSPs are “the antithesis of domestically rooted and owned national poverty strategies”. African NGOs commented that “in recent years bilateral donors have ceded much of their decision-making power to the IMF“.

A statement from the International Confederation of Free Trade Unions (ICFTU) also complains that the IMF has not implemented its pledge to “streamline” structural conditionality. The IMF said it would only place loan conditions on the exchange system, the financial sector, and fiscal policy. The ICFTU believes that “various recent lending agreements still appear to include numerous structural conditions outside of the core areas”, citing a November 2001 stand-by arrangement with Romania which included conditions on domestic energy prices, privatization and restructuring of state-owned enterprises.

The Reality of Aid 2002