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Structural conditionalities in the IMF: A discussion between the IMF, IEO, and CSOs

10 April 2008 | Minutes


Juan Zalguendo

Ruben Lamdany

Lucy Hayes

Peter Chowla

Jenny Bisping

Pol Vandervoot

Rick Rowden

Fraser Reilly-King

Derrick McCuish

Andrew – Malawi Economic Justice Network

Christoff – GCAP Africa

William Lockhart – Puerto Rica

Per Kurowski

Elena Gerebizza

Presentation by Ruben Lamdany of IEO

Main findings:

  • Still 17 conditions on average – same as before streamlining

  • Most conditions would have limited impact (with little follow-up)

  • Only half are met as agreed

  • 1/3 of conditions in areas where the IMF has no expertise (down from half)


  • Need changes in the framework

  • Administrative rule to cap number of conditions

  • Need clear ownership of programmes

  • Need to keep conditions in areas of Fund expertise

Other points

  • Using same incentives since 2002 is not sufficient to achieve objectives, but the board seemed to think that it can work

  • IEO feels you need some new mechanism to force criticality and parsimony

  • In programmes going to the board since IEO – EDs still found many conditions in programmes, outside core areas


  • 7,140 conditions studies in DB

  • 1,567 looked at structural depth and effectiveness/durability

  • In depth case studies

Structural depth

  • We gave benefit of the doubt to depth of conditions – little, limited, high

  • For High SD conditions, less than half implemented, 10% reversed within one year

  • SD more intense in core sectors

Compliance – 54% of conditions complied; only 1/3 of High SD complied

  • Another 25% late or partially complied

  • 60% compliance in core sectors, 37% outside core

  • Compliance lowest in privatisation

Reforms – weak link between conditionality and subsequent reform

  • Broader government ownership is key for sustainability of reform – not just econ policy making team

  • Ownership must include implementing bodies (line ministries, agencies)

Presentation: Lucy Hayes of Eurodad

Review of conditionality guidelines

Reviews and evaluations

Main findings:

Distribution of conditions – privatization and liberalisation conditions

Cross- conditionality is still a problem

  • Mali as an example

Sensitive economic policy conditions

  • Zambia as an example


  • Set targets and reduce number of conditions

  • Stop attaching sensitive economic policy reform

  • End practice of cross-conditionality

  • Revisit the definition of ownership

  • Explicitly assess all new PRGF along lines of new guidelines and staff incentives

Presentation: Juan Zalduendo of IMF

Purpose of conditionality

  1. Safeguard Fund resources – make sure we get paid

  2. Provide assurances to members – if they do this, they get money

What is a Fund programme about?

  • Member comes to Fund to get help to fix imbalances

  • What are the problems and what are the solutions – alternatives and give and take

  • It is more involved and open than it is depicted

  • Line ministers sit at the table as well

  • IMF programme does not cover everything the authorities have to do – should be focussed on a subset of things the authorities wish to do

  • Conditionality is a monitoring mechanism

Concerns on conditionality in 2000

  • Too many conditions was problematic

  • Main emphasis on parsimony and criticality

  • Including all programme goals – even if measure is outside Fund core expertise – maybe need to collaborate with authorities

Review – conditionality is here to stay!

  • We need to improve implementation and application

  • It is much more of a partnership

Response to IEO report

  • New data through 2006 – condy is not decreasing

  • Counting conditions is not a very relevant measure

  • Unbundling ideas proves that this is not a very relevant measure

  • Conditions are steps in a process – particular structural benchmarks

  • Sectoral shift to areas of IMF expertise – a great development

  • We agreed need to change on the idea of conditions that we do not stick to (as in they are dropped in later reviews)

  • Lapse rate – many conditions are met late – but that is better than not met at all

  • Follow-up needed

    • Parsimony and criticality need to strengthened

    • Programme documents need to be better on justification

    • Better monitoring and tracking of relation to conditions and goals and strategies

Board endorsed recommendations/management implementation plan (sent to board this week)

  • Board did not support: cap on number of conditions; elimination of SBs; subsidiary role to the WB in non-core areas

  • Greater emphasis on parsimony and criticality needed

  • Better documentation

Main elements of Management Implementation Plan

  • Contact group with PDR/functional/regional/area departments to make recommendations

  • Review and propose revisions to the Operational Guidance Note on SC

  • Enhance MONA database to enable monitoring

  • Make MONA database public on IMF website

Reactions and comments

  • SBs will by definition have low SD – may be part of critical reform – a step to monitor progress

  • Comparing to before CG – a dramatic change in privatisation and liberalisation

  • Fund must be very selective in noncore areas

  • We negotiate with different ministries

Response from Peter CHowla of the Bretton Woods Project

  • Need to separate issues of low-income countries from MICs – they face fundamentally different problems. But the IEO report shows that they are treated the same
  • Eurodad report shows focus on low-income countries – the problem is not short-term balance of payments need, it is a question of growth ande development. The IMF does not have expertise to deal with these topics
  • The details of all this are important – counting conditions and categorising them – but the bigger picture is a question of why the Fund keeps getting involved in these places.

Per K what is “expertise”; is it real?

– Risk is oxygen of development, but IMF is completely anti-risk

Rick R – conditionality is not here to stay: countries are getting away from the IMF

  • imbalances of power in negotiations – so this isn’t really a partnership

Andrew – we are very worried that “conditionality” is here to stay

Fraser – absence of ownership in IMF talk, we can think everything is “critical”

  • it isn’t about better dialogue and communication to the IMF board – we need real ownership

Derrick – We wouldn’t criticise you for limiting conditionality

  • focussing of thought is very important

  • Look at Liberia completion point documents – 12 conditions of which 2 are PRSP and PRGF – that is huge

  • Different between ex-post assessment and ongoing evaluations

Juan on PRGF vs SBA

  • PRGF has a longer outlook, you have to go beyond “external viability”

  • Fund is not an institution that knows about development

  • We will need to rely on others like WB, but for fiduciary reasons conditionality must be there

  • On ownership – we know documentation is the solution; the point is that the country has invited us, we go with a preliminary assessment and have discussion of the challenges going forward. Things do get changed on missions and in the field – process of improvement and exchange of ideas

  • On unequal powers – it is an issue that each mission chief must decide how to handle, this is part of the business, something we have to handle

  • On crazy conditions – critical for our programme is key, these were probably for outside donors or others