Who's in Charge? Ownership and Conditionality in IMF-Supported Programs

IMF Working Papers, September 1, 2003

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Title: Who's in Charge? Ownership and Conditionality in IMF-Supported Programs
Author: James M. Boughton
Date: September 1, 2003
Summary (verbatim): "IMF lending is conditional on a country's commitment to carry out an agreed program of economic policies. Unless that commitment is genuine and broadly held, the likelihood of implementation will be poor. Is there a conflict between national commitment and conditional finance? Are national authorities or other agents in the country less likely to 'own' a reform program simply because it is conditionally financed? This paper argues that potential conflicts are reduced when program design takes the country's interests and circumstances into account and when conditionality results from a genuine process of interaction between the IMF and the borrower."

IMF lending is conditional on a country's commitment to carry out an agreed program of economic policies.
Implementation likelihood is poor unless the country's commitment is genuine and broadly held.
The paper poses the questions:
- Is there a conflict between national commitment and conditional finance?
- Are national authorities or other agents in the country less likely to "own" a reform program simply because it is conditionally financed?
Core argument: "Potential conflicts are reduced when program design takes the country's interests and circumstances into account and when conditionality results from a genuine process of interaction between the IMF and the borrower."

Design programs that take the country's interests and circumstances into account.
Ensure conditionality results from a genuine process of interaction between the IMF and the borrower to reduce conflicts between national commitment and conditional finance.
Emphasize broad-based, genuine commitment within the borrowing country to improve the likelihood of implementation.

Subject: Balance of payments, Capital inflows, Depreciation, Exchange rates, Foreign exchange, National accounts, Political economy, Poverty, Poverty reduction, Structural reforms
Keywords: borrowing country, Capital inflows, Conditionality, country authorities, country ownership, country's authorities, Depreciation, exchange rate, Exchange rates, financing constraint, fund staff, IMF, IMF policy conditionality, Macroeconomic Policy, Ownership, Poverty reduction, WP

Who's in Charge? Ownership and Conditionality in IMF-Supported Programs - WP/03/191
- Who's in Charge? Ownership and Conditionality in IMF-Supported Programs - WP/03/191 (Markdown version)
- Who's in Charge? Ownership and Conditionality in IMF-Supported Programs - WP/03/191 (PDF)