Chapter 7 IMF Conditionality and Country Ownership of Adjustment Programs
Author:
Mohsin S. Khan
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Language:
English
Print Publication Date:
03 Apr 2006
Keywords:
SEM; IMF program; country; IMF-supported program; program implementation; IMF effort; current account ratio; Current account; Capital flows; Private capital flows; Fiscal stance; Global; Sub-Saharan Africa; East Asia; Africa; Europe; adjustment program; IMF loan disbursement; IMF's article; country ownership; core area; Moral hazard; Loans; Structural reforms; Collateral; International reserves

Abstract

This article uses finance and agency theory to establish two key propositions about IMF conditionality and country ownership of IMF-supported adjustment programs—first, that the conditionality attached to these programs is justified and, second, that country ownership of these programs is crucial for their success. Because IMF conditionality and country ownership are both necessary, the challenge is designing conditionality that maximizes ownership while providing adequate safeguards for IMF lending. The article analyzes several recent proposals aimed at enhancing country ownership of policies contained in IMF-supported programs. These proposals include encouraging countries to design their own adjustment and reform programs, streamlining structural conditionality, introducing flexibility in the timing of structural policy measures (floating tranche conditionality), and applying conditionality to outcomes rather than policies (outcomes-based conditionality).

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Cover IMF-Supported Programs
IMF-Supported Programs
Recent Staff Research
ISBN:
9781589063617
Publication Date:
03 Apr 2006
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589063617.072
Pages:
292

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