IMF Conditionality

Conditionality helps countries solve balance of payments problems without resorting to measures that harm national or international prosperity. In addition, the measures aim to safeguard IMF resources by ensuring that the country’s finances will be strong enough to repay the loan, allowing other countries to use the resources if needed in the future. Conditionality is included in financing and non-financing IMF programs with the aim to progress toward the agreed policy goals.

Member countries that borrow from the IMF have primary responsibility for selecting, designing, and implementing policies to make their economic program successful. The program is described in a letter of intent, which typically includes a memorandum of economic and financial policies for more detailed description of the policies. The program’s objectives and policies depend on a country’s circumstances.

The overarching goal is always to restore or maintain balance of payments viability and macroeconomic stability while setting the stage for sustained, high-quality growth. For low-income countries, there is an additional objective of reducing poverty.