IMF Conditionality and Country Ownership of Programs

Author/Editor:

Mohsin S. Khan ; Sunil Sharma

Publication Date:

September 1, 2001

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The paper uses finance and agency theory to establish two main propositions: First, that the conditionality attached to adjustment programs supported by the IMF is justified. Second, that ownership of programs by the borrowing country is crucial for their success. Hence, since both IMF conditionality and country ownership are necessary, the task is one of designing conditionality to maximize program ownership, subject to providing adequate safeguards for IMF lending. The paper discusses some recent proposals for enhancing ownership, and in particular, makes a case for incorporating floating tranches and outcomes-based conditionality in IMF-supported adjustment programs.

Series:

Working Paper No. 2001/142

Subject:

Central banks Collateral Financial institutions Financial sector policy and analysis International reserves Loans Macrostructural analysis Moral hazard Structural reforms

English

Publication Date:

September 1, 2001

ISBN/ISSN:

9781451856255/1018-5941

Stock No:

WPIEA1422001

Pages:

32

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