Press Release: IMF Executive Board Approves New Conditionality Guidelines

IMF News, September 26, 2002

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Press Release No. 02/43
Date: September 26, 2002
The Executive Board of the IMF approved new guidelines on the design and implementation of conditionality in Fund-supported programs.
The guidelines represent the culmination of a comprehensive and far-reaching review of conditionality launched two years ago.
This is the first revision of the IMF's conditionality guidelines since 1979.

Revision process was initiated by Managing Director Horst Köhler after taking up his position in May 2000.
The review received the firm backing of the Board of Governors at the September 2000 Prague Annual Meetings.
The guidelines were developed after seeking input from civil society and public forums held in several countries.
The Executive Board discussed a series of staff papers on the topic over the past two years before considering the actual guidelines.
A note by IMF staff providing additional explanation and context for the conditionality guidelines was released along with the guidelines.

Streamline and focus conditionality to enhance the success and effectiveness of Fund-supported programs.
Promote national ownership of reforms.
Improve interaction between the Fund and borrowing countries to promote sustainable growth and development.

National ownership of policy reforms.
Parsimony in the application of program-related conditions.
Tailoring of programs to the member's circumstances.
Clarity in the specification of conditions.
Establish a clearer division of labor with other international institutions, especially the World Bank.

The guidelines introduce specific criteria for deciding whether conditions are appropriate in each case.
Structural conditionality is regarded as an important element of Fund-supported programs, provided it is critical to achieving the macroeconomic objectives of the program.
The guidelines specify roles for different types of program-related conditions, including:
- performance criteria
- structural benchmarks
- prior actions

An essential aspect of the IMF view of conditionality is that the member country should take primary responsibility for its own policies.
Documents setting out the country's reform agenda should be drafted as much as possible by the authorities rather than by Fund staff.
The Executive Board agreed that properly designed conditionality can complement and reinforce national ownership.

Source: IMF Press Release, September 26, 2002