Conditionality as an Instrument of Borrower Credibility
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Summary:
Fund member countries that adopt market-friendly policies often encounter a credibility problem—market-friendly policies are not effective in stimulating private investment as long as there remains a significant risk of policy reversal. The root of this risk lies in the discretionary policy-making authority of governments. Committing to a program with the Fund, and endorsing its conditionality, is one instrument available to governments to overcome this difficulty. The paper develops this interpretation of conditionality and indicates some of its operational implications for Fund programs.
Series:
Policy Discussion Paper No. 1997/002
Subject:
English
Publication Date:
February 1, 1997
ISBN/ISSN:
9781451974423/1564-5193
Stock No:
PPIEA0021997
Pages:
18
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