|1. Policy Review|
|1.2. Clarify what is expected in terms of numbers and focus of structural conditions.||Supported: “The preferred way forward appears to be to strengthen efforts to achieve parsimony by focusing on criticality, and requiring rigorous justification for conditions.”||Propose changes to the Operational Guidance Note (OGN)—revised in January 2006—that would highlight the importance of a clear and thorough justification of the criticality of structural conditionality (SC)—covering to the extent possible the life of the program—in all initial staff reports. See item 2.1 below.|
Assess the need for additional changes to the OGN that would serve to highlight parsimony and criticality while minimizing subjectivity; this would include guidance on how to deal with donor-driven conditionality and structural conditions introduced at the request of country authorities (see also item 2.4 below).
|The Operational Guidance Note (OGN) was revised in July 2008 to emphasize the importance of linking structural conditionality to program goals, to emphasize parsimony and criticality, and to provide further specific guidance on these concepts (Revisions to the Operational Guidance Note on Conditionality; July 10, 2008). Following circulation to the Board, the revised OGN was made available on the Fund’s external web site.|
|2. Program and Conditionality Design|
|2.1. Identify the main goals of each program and set structural conditions that contribute to these goals.||Supported: “Directors agreed ... that the link between program goals, strategies, and conditions should be better explained in Board papers.”||At the time of the pre-brief meeting, staff should propose the program strategy that is necessary to achieve the program goals. To the extent possible, the framework of structural reforms that is considered critical for implementing this strategy during the program period should be discussed.|
Anticipated SC should be indicated—to the extent possible—at the pre-brief stage. Justification of SC would be strengthened in the briefing paper sent to management for approval. Such conditionality would be modified in light of discussions with country authorities. The purpose of such a process is to define the contours of reform that are critical to the programs as early and clearly as possible, including in terms of links between program goals and strategies, and the supporting conditionality.
At the time of approval of a new UFR arrangement (and when new conditions are introduced during program reviews), Board documents will present a clear description of the links between program goals and program strategies, and their link to the proposed reform framework.
Further, all future discussions of SC under a program (including modifications introduced during reviews) would be anchored in the reform framework presented in the originating program document. An expansion in the scope of SC outside the original reform framework would need to be justified in the staff report.
Programs of longer duration might define SC at later stages but within the specified reform framework. If the program strategies are redefined during program reviews owing to new or unforeseen developments or, if applicable, the existence of a revised PRSP, program documents should reflect and justify these changes.
See also item 2.4 below.
|Revisions to the OGN call specifically for program documentation to present the links between program goals, reform strategies, and underlying structural conditionality, and require that conditionality added during reviews be in line with the reform strategy presented in the original program document or justified in the new staff report. Program documents, particularly those for longer-duration arrangements, are to provide a roadmap of reform, and the documentation for the last program review will take stock of the experience with implementation.|
|2.4. Accommodate national authorities’ desire to have program-related documents address policies that are not subject to conditionality. Documents should distinguish between conditions on which IMF support is binding and other elements of the authorities’ policy agenda.||Supported: “Directors agreed that ... country ownership of programs is essential, and some emphasized that conditions set for non-critical areas when requested by the authorities may serve to enhance ownership.” Also, to enhance “ownership—and thereby compliance— Directors called for ... reliance on the authorities’ views in setting conditions” and several Directors advised against setting “conditions in non-critical areas at the request of donors.”||Although no further initiatives are required as these recommendations are already part of the Conditionality Guidelines (CG), revisions to the OGN to clarify these matters is likely. For instance, the CG specify that the authorities might describe their program in the Memorandum of Economic and Financial Policies, and that they should distinguish between the SC on which Fund-financing depends and other elements of their program. See also item 1.2 above.||No further specific initiatives are contemplated.|
|4. Development of a Monitoring and Evaluation Framework|
|Develop a monitoring and evaluation framework linking conditions in each program to reforms and specified goals and improve the system to track conditions (MONA) with a view to disclose this data||Supported: “Directors agreed…that the link between program goals, strategies, and conditions should be better explained in Board papers—and that this should be monitored.”||Establish framework within MONA to monitor the links between goals, reforms, and structural conditionality.|
Issue annual updates (Board information) on the application of SC.
Make data in MONA available on the Fund external website—only for staff reports that are in the public domain.
|A system to link goals, reforms, and structural conditionality was established within the MONA database framework in July 2008. The first Annual Report on Structural Conditionality was provided to the Executive Board for information in July 2008 (Application of Structural Conditionality 2008 Annual Report) and was made available on the Fund’s external website. It provides new data for the period 2005–07. The second annual report will soon be issued to the Board for information and staff will recommend that it be made available on the Fund’s external website.|
|5. Information in Board Documents|
|Program documentation needs to be more explicit about the objectives being supported by the IMF and how the measures being proposed would help achieve these objectives.|
For PRGF arrangements, in particular, program requests should be accompanied by an operational roadmap covering the length of the program, elaborating on the modalities of the reforms and on their sequencing and expected impact.
|Supported: “Directors agreed…that the link between program goals, strategies, and conditions should be better explained....” In particular:…some Directors reiterated their support for inclusion in program documents of text boxes that lay out the rationale for ... conditions.”|
“…several Directors proposed that initial program requests include a roadmap describing the sequencing and linkage of conditions to stated program goals; some Directors proposed that final program reviews should include a stock-taking to compare stated program goals with their achievement.”
|See item 2.1 and 2.4 above.|
Staff reports should include a description of the links between goals, strategies, and conditionality. A judgment that a condition is of critical importance for achieving program goals should be at the core of such description. One way of doing so would be for staff to quantify the impact of the implementation of SC on the macroeconomic framework of the Fund-supported program; it is recognized, however, that such assessment might not always be possible ex ante. In addition, in the context of reviewing the OGN, the contact group will assess if there is a need for additional guidance regarding the use of structural benchmarks.
The use of an appendix table would be a possibility for establishing these links but would not be required; these appendix tables will not be subject to the usual word count limits.
|See item 2.1 above.|